Stocks climbed Tuesday as investors cheered upbeat earnings forecasts from heavyweights like blue-chip giant General Electric and drug maker Pfizer Inc. 

A strong jump in November housing construction as well as rosy earnings from No. 1 U.S. consumer electronics chain Best Buy Co. also fueled investors' hopes that the economy is improving.

Late-day buying propelled the Nasdaq Composite Index technology bellwether to a close above 2,000 for the first time in a week, while the Dow Jones industrial average fell just short of the key 10,000 level.

The Dow rose 106.42 points, or 1.08 percent, to 9,998.39, while the Nasdaq composite added 17.57, or 0.88 percent, at 2,005.02. The Standard & Poor's 500 index gained 8.62 points, or 0.76 percent, to 1,142.98.

Investors are wary of bad earnings surprises, though, so most gains could slip as companies start reporting fourth-quarter results in January, analysts said.

"The bear market is over, but the bull market is not yet upon us,'' said Stanley Nabi, managing director at Credit Suisse Asset Management, which oversees $100 billion in North America.

"There's a feeling that we've turned the corner — that the bottom has already been realized and things are actually getting a little better," said Edgar Peters, chief investment officer at PanAgora Asset Management. "How quick the recovery is still debatable, but the recession is not going to get any worse."

General Electric reassured Wall Street analysts that the company's profits would meet targets this year and grow by at least 10 percent in 2002 and 2003, as strength in its diverse businesses help combat a weak global economy. GE's stock, a Dow component, rose $1.42 to $39.72. 

Bucking the trend of gloomy drugmaker forecasts, Pfizer Inc., the world's largest pharmaceuticals company, rose 31 cents to $40.64 after it reaffirmed it expects earnings to grow at least 51 percent next year. The news allayed some of Wall Street's skittishness, which has been amplified by grim outlooks from companies like drugmaker Merck & Co. 

Tempering some investor enthusiasm was Solectron Corp., the world's largest contract electronics manufacturer, which reported a loss and said sales could drop further in future quarters. Solectron was the New York Stock Exchange's most actively traded stock, falling $2.71 to $12.10. 

Housing starts rose 8.2 percent to an annual rate of 1.645 million units in November from an annual rate of 1.521 million units in October. Economists in a Reuters survey had predicted November starts would fall to 1.550 million units. 

Shares of homebuilders rose broadly after the better-than-expected housing data, which partly counterbalanced fears about the economic recession. Warmer-than-usual weather and lower interest rates have buttressed homebuilders' profits amid the slump. 

Lennar Corp.'s stock soared 6.64 percent, or $2.75 to $44, while Ryland Group Inc. gained 78 cents to $71.31. Both companies said on Tuesday quarterly earnings would either meet or exceed expectations. Meanwhile, the Standard & Poor's Homebuilding index rallied 2.72 percent. 

Rosy earnings from No. 1 U.S. consumer electronics chain Best Buy Co., helped drive the market higher. Best Buy reported quarterly earnings rose 40 percent, helped by strong sales of digital products like DVD players and cameras. It rose $3.55 to $72.55. 

No. 2 electronics retailer Circuit City Stores Inc. posted a better-than-expected rise in earnings as expense control and better marketing helped increase sales of wireless phones, DVDs, and home entertainment equipment. It rose 16 cents to $23.86. 

The stock of Siebel Systems Inc., Nasdaq's second-most active stock, jumped $3.74, or 13.75 percent, to $30.94 after a Banc of America analyst raised the company's earnings estimates to reflect improvement in the software maker's business. 

Lingering questions about the financial solvency of independent power producers continued to plague the sector after the bankruptcy of energy trader Enron Corp. 

Dynegy Inc., which on Monday saw its credit rating downgraded by Moody's Investors Service, was hit hard. In Tuesday's trading, Dynegy's stock fell 80 cents, or 3.69 percent, to $20.90. Enron was off 6 cents, or 10.53 percent, at 51 cents. 

Investors were on edge ahead of key economic releases due later in the week, including a revision to third-quarter gross domestic product, personal income and spending data and the University of Michigan's consumer sentiment index.

Advancing issues outnumbered decliners nearly 2 to 1 on the New York Stock Exchange. Volume totaled 1.32 billion shares, ahead of Monday's 1.23 billion. 

The Russell 2000 index, which tracks smaller company stocks, rose 5.55, or 1.2 percent, to 485.49. 

Overseas, markets were mixed Tuesday. Japan's Nikkei stock average closed with a gain of 1.1 percent. In Europe, France's CAC-40 slipped 0.1 percent, Germany's DAX index fell 0.6 percent and Britain's FT-SE 100 rose 0.3 percent.

Reuters and the Associated Press contributed to this report.