Stocks rallied late Tuesday as hopes for a spring recovery counterbalanced worries that any economic rebound might not be strong enough to last.

The blue-chip Dow Jones industrial average climbed 129.88 points, or 1.33 percent,  to end at 9,893.84, according to preliminary numbers. The technology-laced Nasdaq Composite Index ended up 58.20 points, or 3.06 percent,  to close at 1,963.10, while the broader Standard & Poor's 500 Index rose 14.90 points, or 1.32 percent,  to end at 1,144.80.

"I'm not seeing any news today that is specifically causing this, but it looks like investors are anticipating better times ahead and saying that 'We better own stocks because the tide is getting ready to turn,'" said Bill Barker, investment strategy consultant with RBC Dain Rauscher.

So far this week, the economic news has been upbeat. Personal spending data, construction spending numbers and a closely watched gauge of the manufacturing sector all came in better than expected on Monday.

However, market watchers have cautioned against too much exuberance, noting fourth-quarter earnings season starts later this month.

The market has moved up considerably since making its 2001 low for the year in September, following the terrorist attacks. But that progress has slowed in recent weeks, as investors, unsure the advance would last, sold stocks to lock in profits from the big rally.

Investors are anxiously awaiting more key economic data due this week, including monthly unemployment figures on Friday.

Investors have been selling when economic reports are negative or mixed and create uncertainty about the timing of a recovery. As a result, the Dow has been unable to stay above 10,000 and the Nasdaq is still below 2,000. 

Even the prospect of an interest rate cut — the 11th such move of the year — by the Federal Reserve next week isn't expect to help stocks move much higher. Analysts say that reduction is already reflected in the market. Selling pressure could also gain momentum late in the month as investors sell stocks for tax purposes.

In trading, Enron Corp. rose 46 cents, or 115 percent, to 86 cents on speculation that up to $1.5 billion in new financing from J.P. Morgan Chase and Citigroup would help rescue the energy company, which filed for bankruptcy protection on Sunday. J.P. Morgan Chase gained 67 cents to $37.22, while Citigroup advanced 92 cents to $47.83.

Technology bellwethers helped to drive the Nasdaq market to its highest finish since mid-August.

Cisco Systems Inc., which finished up 66 cents, or 3.3 percent, at $20.52, topped the list of most active on the Nasdaq. Its chief executive said at the company's annual meeting for financial analysts that orders in November met expectations as the biggest maker of computer-networking equipment continued to grapple with anemic sales. Rival Ciena rose $1.67 to $18.73.

Makers of microchip equipment helped buoy the market following a call by a UBS Warburg analyst who said the battered industry had hit bottom and was poised to recover. Applied Materials gained $3.16, or more than 8 percent, to $42.43. Novellus Systems Inc. rose $4.24, or 11.3 percent, to $41.70 after UBS Warburg said the company had the "best share appreciation potential" of the large firms.

Intel Corp., the world's largest maker of computer chips, rose 82 cents to $32.86. UBS Warburg hiked its 12-month price target on the Nasdaq heavyweight and Dow component to $36 from $29.

Micron Technology Inc. rallied $1.44 to $30. Korea's Hynix Semiconductor Inc. plans to start talks on an alliance with Micron, fueling hopes the memory chip leaders can reshape an industry reeling from overcapacity.

Other tech gainers included Hewlett-Packard, which climbed $1.01 to $22.50.

The Philadelphia Stock Exchange semiconductor index shot up 6.47 percent.

In other corporate news, Coca-Cola Enterprises Inc., the largest bottler and distributor of Coca-Cola Co. drinks, rose 85 cents to $17.87 after it said this year's earnings will be at the upper end of its previously lowered range.

Synopsys Inc. slumped in heavy trading after it said it will acquire Avant for $769 million in stock, rounding out its product line-up for software used to design computer chips and was battered after Robertson Stephens cut its rating on the company's stock. Synopsys fell $2.36 to $53.03, while Avant surged $6.90 to $17.85.

Home Depot rose $1.31 to $47.70 after Merrill Lynch added the stock to its focus list, suggesting it expects strong performance ahead. 

Other retail stocks showed strength, too. Wal-Mart rose 59 cents to $55.17.

Investors were also carefully watching the Middle East. Israel unleashed air strikes Tuesday in retaliation for Palestinian suicide bombings, and three missiles hit 50 yards from Yasser Arafat's office as the Palestinian leader worked inside. Arafat was not injured, and Israel said he was not the target of the strike.

The bombings followed Palestinian suicide attacks in Israel over the weekend that left 25 people dead.

Advancing issues led decliners more than 2 to 1 on the New York Stock Exchange. Consolidated volume came to 1.74 billion shares, ahead of the 1.52 billion reported Monday. 

The Russell 2000 index was up 10.81 at 467.84. 

Overseas, Japan's Nikkei stock average rose 0.8 percent. In Europe, Germany's DAX index gained 0.5 percent, Britain's FT-SE 100 advanced 0.9 percent, and France's CAC-40 climbed 1.5 percent.

Reuters and the Associated Press contributed to this report.