Trading was light in the pre-holiday session, but the gains were big, with the Nasdaq composite index also rising sharply, picking up more than 40 points.

The sharp advance defied expectations that stocks would pull back after nearly two months of rallies on Wall Street and that traders would not want to commit to stocks ahead of the holiday weekend.

Investors first got a lift from a jump in consumer spending ­ the news helped the market shake off its disappointment from the previous session when it was irked by a weaker-than-expected reading on consumer sentiment.

Investors were also pleased by a spike in orders to U.S. factories for big-ticket items and an increase in manufacturing activity in the Midwest. Analysts said the trio of positive reports assuaged investors' concerns that the economy could slip back into recession.

"The numbers suggest the economy is indeed resilient and the consumer has stayed on track where spending is concerned," said Kevin Caron, market strategist, Ryan, Beck & Co., LLC.

The Dow closed up 256.01, or 3 percent, at 8,932.43, according to preliminary calculations. The Dow more than recouped the 172.98 lost in the previous session and was on its way to an eighth straight winning week.

The last time the Dow closed higher was Aug. 22 when it stood at 9,053.60.

In another sign of the market's growing momentum, the Dow enjoyed its best day before Thanksgiving ever, surpassing the 2.5 percent gain seen in 1957, according to Markethistory.com, a financial research Web site.

The broader market ­ up for six of the past seven weeks ­ was also higher today. The Nasdaq soared 43.55, or 3 percent, to 1,487.98. The last time the Nasdaq finished higher was June 19 when it was at 1,496.83.

The Standard & Poor's 500 index advanced 25.65, or 2.8 percent, to 938.96. The last time the S&P finished higher was Aug. 26 when it stood at 947.95.

"Today, the market couldn't hold back. It had to respond to the batch of positive economic news," said Peter Cardillo, president and chief strategist of Global Partner Securities Inc.

Trading was light ahead of Thursday's Thanksgiving holiday, when the market will be closed. The market will be open for a half day on Friday.

Wednesday's gains followed a report from the Commerce Department saying consumers ratcheted up their spending by 0.4 percent in October. It was the biggest increase in three months, and an improvement over September's 0.4 percent dip.

Investors have been paying close attention to news about consumers, whose spending accounts for two-third of the economy and who retailers are counting on for a decent holiday shopping season.

The market's upward momentum intensified following reports on durable goods and manufacturing activity in the Midwest. The Commerce Department reported that orders for durable goods ­ items expected to last at least three year ­ rose 2.8 percent in October, exceeding economists' expectations for a 1.8 percent gain.

And, the Purchasing Management Association of Chicago reported that its index of area manufacturing activity rose to 54.3 in November from 45.9 in October. The reading was better than the 48.8 percent analysts had anticipated. A reading above 50 indicates expansion in activity.

The Chicago manufacturing report is closely watched by Wall Street because it is considered a gauge of the health of the manufacturing sector across the nation. On Monday, the Institute of Supply Management, formerly the National Association of Purchasing Management, will release its report on U.S. manufacturing activity.

Analysts said the reports built a strong case for a resilient economy, rather than one that was prone to reverting back to recession.

"What is most telling in the composite picture is what the numbers aren't saying. The numbers are not indicative of an economy that is rolling over for the double dip (recession) scenario. This is very important because this has been a debate for last year," Caron said.

Retailers traded higher on the consumer spending report. Target rose $1.46 to $35.04 and Best Buy advanced $1.41 to $27.03.

Auto and appliance makers got a lift from the durable goods report. DaimlerChrysler climbed $1.73 to $35.50, while Maytag rose $1.28 to $30.23.

Drug maker Eli Lilly surged $5 to $69 on good news of its own ­ government approval of two drugs yesterday and an upgrade to "buy" from Standard & Poor's.