Despite the day's strong trading, some analysts were skeptical about whether the gains would hold, particularly after three weeks of persistent declines. Stocks have not enjoyed three straight days of gains since the year began; they've also tended to lose momentum after robust starts, even in the face of good earnings and positive economic data — a pattern that has made investors extremely cautious.

"The fact that the market came down so hard during the first three weeks of the year has got people saying 'Gee, the market is smarter than me, what is it trying to tell us?"' said Todd Clark, head of listed equity trading at Wells Fargo Securities. "Everyone is looking deeply into earnings reports and guidance to see if there is something that justifies the declines that we've had."

The Dow Jones industrial average rose 37.03, or 0.35 percent, to 10,498.59.

The broader gauges also closed higher. The Standard & Poor's 500 index was up 5.66, or 0.48 percent, at 1,174.07. The Nasdaq composite index rose 26.14, or 1.29 percent, to 2,046.09, its best one-day point gain since Dec. 7. The tech-focused index had dropped nearly 6 percent over the last three weeks.

Oil prices were volatile after the U.S. government and an industry group issued mixed reports on fuel inventories. The government's weekly report, which is most closely watched, showed a jump in crude stores, a sharp drop in gasoline supplies and an expected draw in distillates, which include heating oil. However, the American Petroleum Institute reported steep declines in all three categories.

The government's report of a build in crude alleviated pricing pressure, and crude futures declined 86 cents to settle at $48.78 per barrel on the New York Mercantile Exchange. Oil prices were still uncomfortably close to the $50 mark, however, amid growing anxiety about trouble in the Mideast ahead of the upcoming elections in Iraq.

Investors were also focused on earnings and forecasts during a week when hundreds of companies were releasing results. The spate of good news and momentum from the previous session raised some hope that investors would return to the market in greater numbers.

"I think it feels like we might be able to hold a few days to the upside, assuming corporate earnings news continues to cooperate," said Jack Caffrey, equities strategist at J.P. Morgan Private Bank. "The good news is, the good news is spread around today. It's not like people are taking their cue from any one datapoint. It seems to make for a somewhat healthier backdrop."

Texas Instruments Inc. surged 7.3 percent, or $1.54, to $22.66, as the maker of chips for cell phones beat Wall Street's expectations despite a dip in fourth-quarter profits compared to a year ago. The company warned that first-quarter revenue would be lower due to seasonal slowness and a buildup of inventory. Merrill Lynch upgraded the stock to "neutral" from "underperform," citing a belief that the company was more likely to meet estimates in 2005.

Software maker Oracle Corp. gained 3 cents to $13.62 after reiterating its outlook for the current fiscal year and sharply raising its forecast for 2006, citing likely earnings gains related to its acquisition of PeopleSoft.

Sirius Satellite Radio Inc. shed 6 cents to $6.18 after posting wider fourth-quarter losses. Still, holiday sales drove revenues up fivefold, prompting the company to raise its 2005 year-end subscriber estimate to more than 2.5 million.

ConocoPhillips added $1.59 to $90.49 after more than doubling its fourth-quarter income due to high prices for crude and natural gas prices and better refining margins. The nation's third-largest oil company beat estimates by a wide margin.

Advancers outnumbered declining issues by almost 3 to 1 on the New York Stock Exchange. Preliminary consolidated volume on the New York Stock Exchange came to 2.06 billion shares, compared to 2.03 billion yesterday.

The Russell 2000 index, which tracks smaller company stocks, was up 10.07, or 1.66 percent, at 616.57, its best one-day point gain so far this year.