According to preliminary calculations, the average of 30 blue-chip stocks ended the day up 52.59, or 0.48 percent, at 11,011.90, its first finish above 11,000 since June 7, 2001, when it closed at 11,090.74.

Today's advance followed a 241-point surge last week as investors grew increasingly optimistic that the Federal Reserve will soon end its string of interest rate hikes. Investment firms' upgrades of Dow components General Motors Corp. and JPMorgan Chase & Co. gave the Dow the final push above 11,000.

"It sends a signal that the U.S. economy has weathered some pretty harsh storms over the past few years and in recent months," Art Hogan, chief investment strategist at Jefferies & Co., said of the Dow's achievement.

Hogan said heightened clarity about the Fed's rate tightening, stabilizing oil prices and new investment money from 401(k) and pension funds have contributed to the market's gains in the new year.

But the market could be tested by key economic data on retail sales and wholesale prices later this week and the upcoming fourth-quarter earnings season.

Broader stock indicators were also at multiyear highs. The Standard & Poor's 500 index rose 4.70, or 0.37 percent, to 1,290.15, a 4 1/2 year high; the Nasdaq composite index added 13.07, or 0.57 percent, to 2,318.69, its best close since Feb. 20, 2001.

Bonds fell slightly, with the yield on the 10-year Treasury note rising to 4.38 percent from 4.37 percent Friday. The dollar was higher against most major currencies, while gold prices edged higher.

Crude oil and natural gas futures retreated as mild winter weather pervaded the country. A barrel of light crude lost 71 cents to $63.50 on the New York Mercantile Exchange, where natural gas slipped 27.2 cents to $9.360 per 1,000 cubic feet.

The Dow came within 16 points of 11,000 last March 7, but fell back amid worries about inflation and higher oil prices, concerns that dogged the market for much of 2005.

"I think technically (today's increase) could be sound, as long as we don't get any economic surprises," said Bill Groenveld, head trader at vFinance Investments.

The blue chips are still more than 6 percent below their all-time high of 11,722.98, reached Jan. 14, 2000, as the high-tech boom approached its peak, but they have recovered well from their low of 7,286.27, reached on Oct. 9, 2002, while the nation wrestled with an economic slowdown spurred by the terrorist attacks on the World Trade Center and Pentagon the year before.

The markets rebounded strongly in 2003, then posted modest gains in 2004. The Dow ended 2005 with a slight loss while the other major indexes edged higher; every time stocks made a significant advance last year, concerns about the impact of record high oil and gasoline prices on inflation, consumer spending and corporate profits sent the market retreating.

But investors' mood changed radically last week with the release of minutes from the Fed's last policy-making meeting, during which the Open Market Committee signaled that its streak of rate hikes dating back to the summer of 2004 would soon end.

Wall Street got its first taste of fourth-quarter earnings from aluminum producer Alcoa, which said after the closing bell that its profit tumbled 16 percent because of the hurricanes, strikes and restructuring costs. Alcoa climbed 36 cents to close at $30.57 in the regular session, but lost 94 cents in after-hours trading.

Goldman Sachs analysts raised GM one notch to "in-line," saying a bankruptcy filing at the world's biggest automaker is "very unlikely anytime soon," and that upcoming catalysts could improve investor sentiment. GM jumped $1.61 to $22.41.

JPMorgan Chase added 65 cents to finish at $40.67 after its upgrade to "neutral" by Prudential Equity Group, which issued an improved outlook for investment banking and asset management firms.

Duke Energy Corp. agreed to sell much of its North American wholesale power generation assets to LS Power Equity Partners for about $1.48 billion, which could rise to as much as $1.54 billion if certain targets are met. Duke rose 6 cents to $27.85.

Boston Scientific Corp. yesterday reiterated a $25 billion bid for medical device rival Guidant Corp., but the offer now includes a deal to sell Guidant's vascular intervention and endovascular businesses to Abbott Laboratories Inc. Johnson & Johnson is also seeking to buy Guidant for $21.5 billion. Boston Scientific fell 36 cents to $25.88, while Guidant added $1.65 to $69, Abbott gained $1.52 to $42.41 and J&J rose 39 cents to $62.99.

Texas Instruments Inc. said it is selling its sensors and controls business to Bain Capital LLC for $3 billion, and instead will shift its focus to digital signal processing and analog chips. Texas Instruments sank 27 cents to $34.18.

The tech sector's gains were muted somewhat by downgrades on International Business Machines Corp. and Amazon.com Inc. JPMorgan lowered IBM one notch to "neutral," saying potential growth is already reflected in its stock price but that several risk factors in services and hardware are not yet being considered.

JPMorgan also said it expects Amazon.com's growth will lag the broader U.S. e-commerce market, and cut the stock to "underweight." IBM fell $1.22 to $83.73, and Amazon.com dropped 79 cents to $47.08.

Advancing issues topped decliners by about 11 to 5 on the New York Stock Exchange, where volume of 1.67 billion shares lagged the 1.78 billion shares that changed hands on Friday.

The Russell 2000 index of smaller companies advanced 6.85, or 0.98 percent, to 706.24.