Technology and media shares led the Nasdaq composite index to its biggest point gain ever and the Dow Jones industrials to a new closing high as investors celebrated the $162 billion planned merger of America Online and Time Warner.

The Nasdaq composite index rose 167.05, to 4049.67. The technology-dominated index has risen more than 300 points in the past two sessions, wiping out most remnants of a three-day slump that cost it 400 points last week.

The Dow rose 49.64, to 11,572.20, topping Friday's record close of 11,522.56.

Broader market indicators were also higher. The Standard & Poor's 500-stock index rose 16.13, to 1457.60, and the Russell 2000 index of smaller companies rose 13.58, to 501.89.

Technology stocks posted big gains in a wide range of sectors. Internet service providers, biotechnology companies and businesses that build computer networks all soared in active trading on the Nasdaq.

But the biggest story on Wall Street was AOL, whose bold move to acquire Time Warner spurred a wave of speculation about additional mergers between new-line and old-line information providers.

Time Warner soared 25-5/16, to 90-1/16, and AOL slipped 2, to 71 3/4, on the New York Stock Exchange after the announcement of their deal, which would be the largest corporate merger ever.

Enthusiasm for the deal spread quickly to other Internet service providers, including Yahoo, up 28-13/16 at 436-1/16, and Lycos, up 9 at 79 3/4.

Media companies also rose as analysts forecast a wave of new partnerships. The hefty price offered for Time Warner--a 64 percent premium to its Friday closing price--suggested media companies could attract lofty takeover bids.

Disney rose 4 3/4, to 35 7/8; News Corp. gained 7-5/16, to 45-1/16.

Analysts suggested the combination of AOL and Time Warner stimulated interest in cable and wireless companies as well.

Technology companies also provided the strongest boost, to the Dow Monday. Hewlett-Packard rose 7-3/16, to 111-1/16, and IBM rose 5, to 118 1/2.

In the past two sessions on Wall Street, technology stocks have returned to the form that led the Nasdaq to an unprecedented 86 percent gain in 1999.

The industrial companies that led the Dow higher last week while technology stocks languished again provided good news, but they had a tough time attracting as much attention as technology and media stocks.

Alcoa slipped 1/4, to 84 3/8, after reporting it earned 89 cents per share in the fourth quarter. Analysts had anticipated earnings of 76 cents per share. Alcoa's board also voted to raise the company's dividend and split its stock 2-for-1.

Corporate earnings for the recently ended fourth quarter are widely expected to show strong growth, setting a stage for further gains by U.S. stocks. Later this week, high-profile technology companies including Yahoo! and Intel will release their fourth-quarter figures.