NEW YORK — Stocks staged a late-day rally on Monday as Wall Street bet that the Federal Reserve will keep interest rates steady next week after more than a year of tapping on the brakes to slow dynamic U.S. economic growth.

Based on the latest numbers, the Dow Jones industrial average (.DJI) climbed 148.34 points, or 1.35 percent, to close at 11,176.14, its highest finish since April 11.

On Friday, the Dow pierced the psychologically key 11,000 level for the first time in 3-1/2 months.

Money flowed into shares of interest-rate-sensitive financial services companies and retailers, giving the market a surge of energy.

"People are convinced that we're not going to have a rate hike, and that alone is enough to promote positive psychological buying patterns in the market,'' said Barry Hyman, market strategist for Ehrenkrantz, King, Nussbaum.

The Federal Reserve meets Aug. 22 to decide the fate of U.S. interest rates. The central bank has tightened monetary policy six times last June, and Wall Street had begun to worry more hikes would bite into corporate profits.

Technology shares also heated up, caught in the backdraft as semiconductor shares made a blazing rebound from recent declines.

The technology-stacked Nasdaq Composite Index (.IXIC), meanwhile, rose 60.22 points, or 1.59 percent, to 3,849.69, while the broader Standard & Poor's 500 Index (.SPX) climbed 19.72 points, or 1.34 percent, to 1,491.56.

But the market's rally was tempered by modest trading volumes, with many Wall Streeters taking summer vacations, traders said.

"It's difficult to get a great deal of excitement about the marketplace when a lot of the players are on the beach,'' said Arthur Hogan, chief market analyst at Jefferies & Co.

J.P. Morgan & Co. Inc. (JPM.N) was leading the Dow higher, rallying 4-1/16 to 147-15/16, as investors guessed the coast was clear in terms of the Fed and scooped up shares of banks and brokerages.

Hewlett-Packard Co. (HWP.N) also bolstered the Dow, plowing 3-15/16 higher to 113-15/16. The personal computer giant is set to report its earnings on Wednesday.

On the Nasdaq, Dell Computer Corp. (DELL.O) was the technology-heavy gauge's most active stock, falling 1 to 36-11/16 after analysts forecast a less robust second half for the world's No. 2 personal computer maker.

But computer chip makers gave the Nasdaq a jolt, and the Philadelphia Stock Exchange's semiconductor index (.SOXX) blasted 7.71 percent higher. The sector had suffered recently amid fears of a cyclical slowdown. Semiconductor giant Intel Corp. (INTC.O) rose 3-1/8 to 66-15/16.

Biotechnology company PathoGenesis Corp.(PGNS.O) was a standout on the technology-heavy gauge. It gained 5-7/32 to 37-31/32 after Chiron Corp. (CHIR.O) agreed to buy the company for $700 million, expanding its franchises in biopharmaceuticals, vaccines and blood testing. Chiron fell 1-15/16 to 46-11/16.

On the New York Stock Exchange, Micron Technology Inc. (MU.N) rose 4-13/16 to 80-1/2 after analysts upgraded the world's second-largest chip maker.

Retailers also posted healthy gains, bolstering the 30-stock Dow index. Home Depot (HD.N), the world's largest home improvement retailer, rose 2-3/8 to 58-5/16.

Earlier in the session, another home improvement retailer, Lowe's Cos. Inc. (LOW.N), posted a 21 percent increase in its second-quarter net income. Lowe's, which is not a Dow component, was up 3-1/16 to 46-13/16.

In other news, TV station owner Chris-Craft Industries Inc. (CCN.N) jumped 16-1/4 to 78-3/4 after global media giant News Corp (NCP.AX) agreed to buy the company and its units for $5.35 billion.

Test and measurement equipment maker Agilent Technologies Inc. (A.N) gained 3 to 43-7/16 after saying it would slash 640 jobs and restructure operations at its troubled health care unit to return it to profitability.

Analysts said data on U.S. consumer prices scheduled for release on Wednesday was expected to do little to shake Wall Street's confidence that the Fed's cycle of higher interest rates is drawing to a close.

"The consensus is that the Fed will not do anything, and as a result, people are trying to position themselves ahead of that news,'' said George Rodriguez, senior vice president at Guzman & Co.

"I expect the market to get stronger in anticipation that things will stay status quo,'' Rodriguez added.

Monday's economic news was mostly encouraging. U.S. business inventories piled up at a stronger-than-expected 0.9 percent in June. Economists had forecast a gain of 0.5 percent.

A rise in inventories can indicate either a weakening in demand, which could mean that goods are accumulating on producers' shelves, or stockpiling by businesses in anticipation of more