NEW YORK — The Dow Jones Industrial Average surpassed 11,000 yesterday for the first time in more than four years, reflecting confidence that earnings reports this month will justify a 2006 rally.

The milestone "is going to draw a lot of investors back to the market," said Louis Navellier, who manages $4.5 billion as president of Navellier & Associates Inc. in Reno, Nev. "It will get the excitement up." Profits that beat estimates may also contribute, he said.

Automakers helped lead the advance as General Motors Corp. Chief Executive Officer Rick Wagoner predicted his company will cut losses "significantly" this year. Homebuilders including D.R. Horton Inc. and Pulte Homes Inc. jumped after a Merrill Lynch & Co. analyst said the industry outlook is favorable.

The Dow industrials added 52.59 to 11,011.90, its first close above 11,000 since June 7, 2001. GM, the world's largest automaker and the average's worst performer last year, set the pace.

The Standard & Poor's 500 Index added 4.70 to 1290.15. The Nasdaq rose 13.07 to 2318.69, its highest close since February 2001.

After crossing 11,000 in the afternoon, the Dow average dipped before recovering in the final 30 minutes of trading. The action reflects the measure's shaky history when it last reached 11,000.

Previously, it had closed above that level 19 times, all between 1999 and 2001, remaining there an average of 6.7 days before retreating. The longest the Dow stayed above 11,000 was for a period of 24 days starting in August 2000, while it's held for only one day on five occasions.

The Dow, which fell 0.6 percent last year, is up 2.7 percent in 2006 and is less than 7 percent below a record close of 11,722.98 reached Jan. 14, 2000. Along with the earnings outlook, the rally reflects optimism the Federal Reserve is close to ending its series of interest-rate increases.

GM rose $1.61 to $22.41. Along with Wagoner's comments, the world's largest carmaker got a boost after its chief financial officer, Fritz Henderson, said it is making progress in selling a majority stake in General Motors Acceptance Corp., its profitable lending arm.

Shares of GM were also raised to "in-line" at Goldman Sachs Group Inc., which cited the stock's 50 percent decline from last year's high. Analyst Robert Barry told clients that the drop overstates the risk of bankruptcy.

More than 500 analysts and investors will be at the Detroit auto show this week to see what GM and Ford Motor Co. are doing to stem market-share losses.

Shares of homebuilders increased after Merrill Lynch analyst Lorraine Maikis said "long-term housing demand remains," in a note to clients. There is demand for second homes, she wrote, and from immigrants.

D.R. Horton, the largest builder by market value, climbed $2.70 to $39.95. Pulte, the second-biggest, gained $2.46 to $44.08. Toll Brothers Inc., the No. 1 builder of luxury homes, added $2.29 to $39.52.

The stock market also got a lift from crude oil, which fell 1.1 percent to $63.50 a barrel on speculation that heating-fuel consumption will plunge because of higher-than-normal U.S. temperatures.

Two stocks rose for every one that fell on the New York Stock Exchange. About 1.67 billion shares changed hands, 3.4 percent more than the three-month average.