Analysts said many investors couldn't resist bargains after four weeks of steep declines. Trading remained light, leading to exaggerated price swings.

"A lot of stocks have gotten down to levels where people want to buy them, and where maybe the economy has bottomed," said Barry Berman, head trader for Robert W. Baird & Co. "But the question of ... whether or not we go to war ... continues to hang over the market."

"There's just not been a lot of bad news today," Berman added. "But how far it goes before running into more profit-taking, who knows."

The Dow Jones industrial average climbed 103.15, or 1.3 percent, to close at 8,018.11, after a two-day loss of 126 points.

The broader market also finished higher. The Nasdaq composite index gained 17.76, or 1.3 percent, to 1,348.99. The Standard & Poor's 500 index rose 11.07, or 1.3 percent, to 848.17.

The three main gauges posted their second week of advances, a feat not seen since the period ended Jan. 10. For the week, the Dow climbed 1.4 percent, the Nasdaq gained 3 percent, and the S&P 500 rose 1.6 percent.

The government said consum er prices rose 0.3 percent in January as worries about war with Iraq helped push up energy prices. The increase matched analysts' expectations.

Wall Street was particularly nervous about the report after the government said yesterday that inflation at the producer (wholesale) level jumped 1.6 percent in January, the biggest increase in 13 years. Three other economic reports yesterday also raised fears about the health of the economy.

Trading has been choppy in recent weeks as investors made short-term bets on whether and when there would be a war with Iraq. Analysts say the market will have trouble sustaining gains, since investors worry that a prolonged conflict could weaken the economic recovery.

An oil-storage facility explosion at the edge of New York's Staten Island also put investors on edge. The Dow fell as much as 60 points in early trading, but quickly recovered after authorities said there was no indication of terrorism.

"We had an early-morning scare relating to the fire," said Steven Goldman, chief market strategist at Weeden & Co. "Given the proximity to Wall Street and looking out the windows and seeing the billowing smoke, obvious concerns surfaced."

Target climbed $1.71 to $28.48 after U.S. Bancorp Piper Jaffray raised the retailer's stock rating to "strong buy" from "outperform."

Verizon gained 88 cents to $35.64 after Credit Suisse First Boston raised the telecom company's stock rating to "outperform" from "neutral."

And Agilent rose 85 cents to $13.45 after the maker of test and measurement equipment posted a first-quarter loss and said it would cut 4,000 jobs.

Decliners included Tupperware, which fell $1.90 to $12.89 after warning its first-quarter results would be significantly below the prior year because the winter weather dampened sales.

BEA Systems fell 58 cents to $10.63 after the software company reported fourth-quarter earnings that beat estimates; but it also gave a cautious outlook for the current quarter.

Advancing issues outnumbered decliners nearly 5 to 2 on the New York Stock Exchange. Volume was light.