Stocks rose Friday after solid results from General Electric and Juniper Networks lifted investor sentiment and boosted their confidence about next week's earnings flood.

Telecommunications-related shares helped push the Nasdaq Composite Index (search) to a fresh 2-1/2 year high, while the Standard & Poor's 500 index (search) reached a peak unseen in a bit under two years.

The Dow Jones industrial average (search) rose 46.66 points, or 0.44 percent, to 10,600.51. The Nasdaq Composite rose 31.38 points, or 1.49 percent, to 2,140.46, hitting its highest level since July 3, 2001. The S&P 500 rose 7.78 points, or 0.69 percent, to 1,139.83 to post its highest close since early April 1, 2002.

The Dow and the S&P 500 both have racked up eight straight weeks of gains, while the Nasdaq wrapped up its sixth in a row. For the week, the Dow rose 1.4 percent, the Nasdaq Composite rose 2.6 percent, and the S&P 500 rose 1.6 percent.

"If the first week is any precursor, then I think the earnings season is going to be nothing short of fantastic," said Arthur Hogan, chief market analyst at Jefferies & Co.

Wall Street is bracing for a rush of earnings reports in the next two weeks, when more than half the companies in the S&P 500 will issue their corporate scorecards.

"The key thing here is that you're starting to see some aggressive buying coming back into the market," said Jim Raphalian, head of institutional trading at Charles Schwab. "There's more than one buyer for any stock being sold, and there are both institutional and retail buyers. And that's because earnings are showing us that fundamentals are sound."

Solid economic data also underpinned sentiment after a report showed U.S. consumer sentiment jumped in early January to its highest level in more than three years as stock indexes rose and job seekers felt more confident.

Industrial conglomerate General Electric (GE), a Dow component, posted fourth-quarter profits 47 percent higher than a year ago, boosted by increased industrial demand. GE closed up $1.35 at $33.35, a new 52-week high.

"These early earnings reports show signs of a broad economic recovery," said Subodh Kumar, chief investment strategist for CIBC World Markets. "However, unlike the first through third quarters, where the markets responded strongly, the expectations of the earnings are already built into the market prices, so we'll see more price fluctuation on individual reports."

Juniper Networks Inc. (JNPR), the No. 2 maker of networking gear, jumped $7, or 30.5 percent, to $29.93. The company said quarterly net profit and sales rose, topping expectations. Juniper also forecast sales and earnings in the current first quarter that would top analysts' targets.

Rival telecom equipment maker Lucent Technologies Inc. (LU) rose 14 cents, or 3 percent, to $4.61 and ranked as the most active share on the New York Stock Exchange.

International Business Machines Corp. (IBM) again drove the market after Smith Barney upgraded the stock and the computer maker landed a $250 million contract to provide Nokia with desktop computers and ongoing services. IBM climbed $1.30 to $95.32, just short of its year high.

Home Depot Inc. (HD) raised its year-end profit forecast by 2 cents per share, although it predicted slightly slower growth in 2004. The stock closed down 49 cents at $34.94.

Oil shares blazed higher as chilly weather in the U.S. Northeast sent NYMEX crude oil futures up about 5 percent. The S&P Oil & Gas Exploration Index surged 12 percent.

But Johnson & Johnson (JNJ) slumped $1.39, or 3 percent, to $50.45 and weighed on the Dow. Several brokerage firms issued reports predicting dramatic declines in the drugmaker's revenue.

Consumer confidence rose to its highest level in two years, according to the University of Michigan's index. In addition, businesses boosted their inventories by a modest 0.3 percent in November, a sign of wary confidence in the economic rebound. However, the government announced industrial production was up only 0.1 percent in December, well short of the 0.5 percent expected by Wall Street and the 1 percent growth posted in November.

Once again, the mixed data left Wall Street without any strong indicators of a quick recovery.

"This has been a challenging week with these kind of economic numbers," said Sharon Stark, chief fixed income strategist at Legg Mason. "The industrial numbers surprised us again, and if this trend continues, that could create some volatility."

The next two weeks mark the busiest period of the quarterly earnings season, but corporate results are already pouring in.

The stock market will be closed on Monday in observance of the late civil rights leader Martin Luther King Jr.'s birthday.

The Russell 2000 index of smaller companies was up 4.05, or 0.7 percent, at 590.41.

Overseas, Japan's Nikkei stock average rose 1.8 percent. In Europe, Britain's FTSE 100 closed up 0.7 percent, Germany's DAX index rose 1.1 percent and France's CAC-40 finished 1.2 percent higher.

Reuters and the Associated Press contributed to this report.