Stocks rose sharply Friday, rebounding from four days of steep losses, as investors flocked to technology names, but indexes still ended the week substantially lower because of what most analysts have agreed is a full-fledged market correction.

The Dow Jones industrial average (search) closed up 111.70 points, or 1.10 percent, at 10,240.08. The Standard & Poor's 500 Index (search) ended up 13.79 points, or 1.25 percent, at 1,120.57, while the Nasdaq Composite Index (search) finished up 40.84 points, or 2.10 percent, at 1,984.73.

For the week, the Dow ended down 3.35 percent, the S&P 500 lost 3.14 percent, and the Nasdaq fell 3.07 percent.

"Now we're seeing some buying, some short covering. The Nasdaq is acting better than the Dow because it had more of a sell-off than the other indexes," Todd Leone, head of listed trading, S.G. Cowen, said.

The demand for stocks outweighed concerns generated by the deadly attacks in Madrid on Thursday, which killed about 200 and wounded 1,430. Fears of more violence, including talk of an attack on the United States, set off a triple-digit fall in the Dow in the previous session.

On Friday, Basque separatist group ETA (search) denied responsibility for the bombings. That revived some fears that the violence was linked to Usama bin Laden's militant Islamist group al Qaeda, but the market held onto its gains.

The question on investors' minds was whether Friday's rebound, following a four-day loss of 467.17 in the Dow Jones industrial average, was an isolated blip or marked an end to the sell-off.

"We've had the 5 percent correction that everybody's been waiting for, and the market's way oversold now," said Michael Murphy, head trader at Wachovia Securities. "But is what we're seeing going to be a big bounce or a small bounce? That'll be the big test."

Buyers were aided by the widely watched University of Michigan (searchconsumer sentiment index, which slipped to a better-than-expected 94.1 in March from 94.4 at the end of February, according to media reports on the subscriber-only index. The preliminary tally will be revised at the end of the month.

However, the confidence index did not take into account this week's losses on Wall Street, nor the increased threat of terrorism after the train bombings in Spain that killed 199 people on Thursday.

The government provided yet another set of contradictory economic reports before Friday's session. Business inventories rose 0.1 percent in January, and business sales climbed 0.4 percent in the same period. But the Commerce Department (searchalso reported that the deficit in the current account — the broadest measure of U.S. trade — rose 12.7 percent in 2003 to an all-time high of $541.8 billion.

Of course, Friday's gains could be an aberration rather than a sign that the selling has ended. In the absence of strong economic data, investors have little positive market-moving news to look forward to until first-quarter earnings reports in April. However, the Federal Reserve (search) could provide a boost when it releases a statement after Tuesday's meeting on interest rates.

Shares of Aetna Inc. (AET) climbed to a 4-1/2 year high after the health insurer raised its outlook for first-quarter and full-year profit and forecast membership gains. The stock closed up $4.77, or 6 percent, at $84.42.

The tech rally was led by Cisco Systems Inc. (CSCO), the world's largest maker of equipment that directs traffic on the Internet. Cisco shares closed up 79 cents, or 4 percent, at $23.13 and were the second most actively traded on Nasdaq.

IBM helped pull the Dow higher. The stock ended up $2.09, or 2.3 percent, at $93.30.

Dell Inc. (DELL) finished the session at $33.05, up $1.06, after J.P. Morgan raised its rating on the second-largest supplier of personal computers to "overweight" from "neutral".

Software maker Oracle Corp. (ORCL) was down 19 cents at $12.06 after the company reported a profit of 12 cents per share, continuing its financial recovery and meeting Wall Street estimates.

Book retailer Borders Group (BGP) reported improved sales at its stores and beat analysts' expectations by 9 cents per share. Borders gained 94 cents to $24.11.

Petco Animal Supplies Inc. (PETC), the pet store chain, slumped 80 cents to $30.30 despite beating estimates by 3 cents and reporting a 7.8 percent increase in quarterly profits.

Lockheed Martin (LMT) said it would delay a final shareholder vote on its proposed merger with technology firm Titan Corp. while the government investigates questionable payments from Titan to foreign consultants. Lockheed fell 15 cents to $44.48, while Titan rose 76 cents to $20.20.

Volume was active, with about 1.39 billion shares trading hands on the New York Stock Exchange, and roughly 1.68 billion shares traded on the Nasdaq. Advancers trounced decliners by a ratio of 8 to 3 on the NYSE, and by about 3 to 1 on the Nasdaq.

The Russell 2000 index of smaller companies rose 14.09, or 2.5 percent, to 582.83.

Overseas, Japan's Nikkei stock average dropped 1.2 percent. Europe's markets staged a modest rebound from Thursday's losses in the wake of the terrorist attack in Spain. Britain's FTSE 100 closed 0.5 percent higher, France's CAC-40 rose 0.4 percent and Germany's DAX index gained 0.3 percent.

Reuters and the Associated Press contributed to this report.