U.S. stocks were higher Thursday, driven in part by some positive news for Microsoft investors. Even negative economic data failed to dampen the upbeat mood on Wall Street. The Dow Jones Industrial Average rose 189 points (2 percent), to 9,264. The broader Standard & Poor's 500 Index gained 24 points closing at 1,084 (2.3 percent), and the tech-weighted Nasdaq Composite Index finished 3.3 percent higher at 1,746, a 56 point gain.

Microsoft was a big factor in moving the market, on news that the software giant may have reached a tentative settlement with the U.S. government of its three-year long antitrust case. Microsoft shares were up over 7 percent.

Investors Thursday seemed more at ease with the latest signs of a weakening economy. A key gauge of industrial activity shows U.S. manufacturing fell deeper into recession in October to a level not seen in a decade.

And consumer spending, which drives two-thirds of U.S. economic growth, declined in September at its fastest pace in 14 years.

Many experts have put off a recovery for the U.S. economy to late next year, based to a large extent on the protracted decline in the nation's industrial sector.

But economist Charles Lieberman sees the recovery happening earlier. He said manufacturing will start turning around soon because the huge inventories built up when the economy was booming are finally getting down to sustainable levels. "I don't think it will be at the end of next year," he said. "I think it will be within the next six months. I think we're going to see manufacturing have to come back to prevent further inventory liquidation. And I don't think we're paying enough attention to all the money the government is putting into the economy. Besides lower interest rates, the government is also spending a lot of money, and that's going to be entering the economy to produce higher GDP."

Meanwhile, corporate profits are sagging, discouraging many investors from buying stocks until they have fallen to what are considered bargain prices.

Robert Harrington, a trader with UBS Warburg brokerage, believes that will all change when investors see signs of a growing economy again. "I think what happens is that profit comparisons get a lot easier as you move into next year, if the economy picks up, as we think it will," he said. "Then you'll start seeing people have more conviction to actually not only buy the "dips" but actually buy stocks on the way up."

With just two months remaining in 2001, the Dow Industrials are still down about 13 percent for the year. The Nasdaq is down about 28 percent.