The markets got a late-day boost from Greenspan, who told an economic conference in London he was confident that jobs lost during the recent recession could be replaced. He also warned U.S. policy-makers against putting up protectionist trade barriers, saying it could be bad for the global economy.

"I think Mr. Greenspan has given us some hope," said Peter Cardillo, president and chief strategist of Global Partner Securities Inc. "He’s confident there will be creation of new jobs and that was what the market wanted to hear."

According to preliminary results, the Dow gained 134.22, or 1.3 percent, to close at 10,702.51, after a weekly loss of 0.3 percent that ended eight weeks of advances. It was the index’s highest finish since June 21, 2001, when it closed at 10,715.43.

The Dow is now slightly more than 1,000 points away from its all-time high close of 11,722.98, reached on Jan. 14, 2000.

The broader gauges were also higher. Negative for much of the day, the Nasdaq composite index closed up 29.96, or 1.4 percent, at 2,153.83, after last week’s 0.8 percent decline ended a six-week winning streak. The tech-heavy Nasdaq last closed higher on June 29, 2001, at 2,160.54.

The Standard & Poor’s 500 index closed up 13.82, or 1.2 percent, at 1,155.37, following a weekly rise of 0.1 percent — its ninth consecutive week of advances. It was the S&P 500’s highest close since March 19, 2002, when it finished at 1,170.29.

About one-third of companies in the Standard & Poor’s 500 have reported results so far, and earnings are up about 27 percent overall — better than the expected 21 percent increase. That combined with upbeat economic news bodes well for the economy, but some analysts are starting to worry that the market is overbought, and may be headed for a pause.

Although technology and small-cap stocks continue to keep pace, there seems to be a fundamental shift toward higher quality companies, said Joseph Keating, chief investment officer at AmSouth Asset Management.

"Our impression is that the Dow will do a little bit better in 2004 than some of the other indexes," Keating said. "The valuations are looking better, and we think people are really going to come around to appreciate that dividends are tax-advantaged."

Greenspan’s comments, which did not address the outlook for the U.S. economy, came a day before the Fed starts a two-day meeting to consider when to raise interest rates. Low inflation and slow jobs growth make it unlikely rates will rise anytime soon, economists say.