Stocks soared Wednesday on rising investor hopes that an economic rebound was just around the corner.

The Dow Jones Industrial average soared 220.45 points, or 2.23 percent, to finish at 10,114.29. It was the Dow's biggest gain since Oct. 3. The technology-laced Nasdaq Composite Index jumped 83.74 points, or 4.3 percent, to end at 2,046.84, while the broader Standard & Poor's 500 Index climbed 25.55 points, or 2.23 percent, to close at 1,170.35.

Wednesday was the first day that the Dow closed above 10,000 since Sept. 5, when it finished at 10,033.27. The market has rallied back as investors digested the shock of the Sept. 11 . Since hitting lows on Sept. 21, the Dow has climbed almost 23 percent, the Nasdaq has soared close to 44 percent and the S&P 500 has risen more than 21 percent. Year-to-date, however, the Dow is still down 6.2 percent, the Nasdaq is off about 17 percent and the S&P 500 is down 11.4 percent.

But analysts said that breaking through milestones like 10,000 or 2,000 is more important to an investor's mood than it is an indication of a bull market.

"Maybe investors are starting to get a bit of confidence back that valuations have stopped falling at least for a while," said Jim Oberweis, portfolio manager at Oberweis Asset Management, which oversees $250 million. "We are also starting to see light at the end of the tunnel for some companies. They are starting to give some guidance as to when they are going to see a turnaround."

Analysts also warned that the market might not be able to sustain its run. In the near term, they said, investors will feel compelled to take some profits, particularly when economic data disappoints them.

Whether that rings true will be seen this week when a slew of data will be released, including productivity and factory orders figures on Thursday and Friday's pivotal government report on the U.S. labor market.

One of the main factors boosting stocks Wednesday was a key report that showed an unexpectedly strong rise in U.S. service sector activity last month. The National Association of Purchasing Management's non-manufacturing index climbed to 51.3 in November vs. 40.6 in October. The November reading points to some growth in the service sector and it cruised past expectations for a reading of 42.7.

Also important to the barrier-breaking rally were tech stocks.

In trading, Internet networking giant Cisco Systems blazed higher and was the Nasdaq's most active share a day after its chief executive said that November orders met expectations as the biggest maker of computer-networking equipment grapples with anemic sales, suggesting the economic bottom is past.

Cisco jumped $1.02 to $21.54 , while software heavyweight Oracle Corp., the world's No. 2 software maker, soared 11.4 percent, up $1.57 at $15.37. Oracle added to the positive vibes on Tuesday after its chief executive said business had stabilized and could see growth next year.

Semiconductor stocks charged higher for a second day in a row, as major computer memory chip makers discussed raising prices. The Philadelphia Stock Exchange's semiconductor index rocketed 7.63 percent, raking in an almost 54 percent gain since Sept. 21.

The Dow's high-tech components contributed to the rise. IBM advanced $4.76 to $121.40, Microsoft rose $2.10 to $68.10, and Intel gained $1.75 to $34.61.

Outside technology, AOL Time Warner climbed $1.08 to $35.83 after the world's largest media company announced CEO Jerry Levin is stepping down and will be replaced by co-chief operating officer Richard Parsons.

Oil stocks were also on the rise after Russia said it would cut its oil exports by about 5 percent from next year, in response to calls from oil cartel OPEC to support world crude prices. Oil heavyweight Exxon Mobil Corp. rose 57 cents to $38.88, boosting the Dow.

However, there were some losers, including Ford, which fell 95 cents to $16.79 after warning of a bigger-than-expected fourth-quarter loss. Ford cited the weak economy, particularly high unemployment, for difficulties it is having collecting on car loans.

Investors also ditched defensive issues, like shares of utilities, health-care and tobacco companies often sought as shelter in times of economic uncertainty. U.S. Treasuries plunged as investors yanked cash out of safe-haven bonds.

Advancing issues outnumbered decliners about 2 to 1 on the New York Stock Exchange. Volume came to 1.73 billion shares, well above the 1.30 billion traded Tuesday. 

The Russell 2000 index, which reflects the performance of smaller company stocks, advanced 11.58, or 2.5 percent, to 479.42. 

Overseas, stocks rose sharply, as well. Japan's Nikkei stock average finished Wednesday with a gain of 2.5 percent. In Europe, France's CAC-40 climbed 3.3 percent, and Britain's FT-SE 100 advanced 2.3 percent and Germany's DAX index gained nearly 5 percent.

Reuters and the Associated Press contributed to this report.