Stocks rose Thursday, with the Standard & Poor's 500 index posting its sixth straight session of gains, as a drop in oil prices below the key $40 level and a strong gross domestic product report fueled investor optimism.

The Dow Jones industrial average (search) rallied 95.31 points, or 0.94 percent, to 10,205.20, while the broader S&P 500 Index (searchgained 6.32 points, or 0.57 percent, to 1,121.26, marking its straight higher close. The technology-laced Nasdaq Composite Index (searchgained 8.35 points, or 0.42 percent, to 1,984.50, its fifth straight day of gains.

Commercial jetmaker and Pentagon contractor Boeing Co. (BA) helped push up the blue-chip Dow on news that the stalled $23.5 billion U.S. Air Force plan to lease and buy modified 767 aircraft from the company still could be concluded. Manufacturing conglomerate 3M Co. (MMM) and construction equipment maker Caterpillar Inc. (CAT) also propped up the Dow.

But energy companies' shares retreated on the sharp decline in crude oil prices. The Standard & Poor's Energy Index fell 1.1 percent amid signs that the Organization of Petroleum Exporting Countries (search) is considering a large increase in its production ceiling. Crude oil futures for July delivery dropped $1.26 to settle at $39.44 on the New York Mercantile Exchange, while NYMEX June gasoline settled 3.40 cents lower at $1.3852 a gallon.

John Lynch, chief market analyst at Evergreen Investments, said interest rate jitters and inflation woes have largely worked their way through the markets, with investors finally focusing on positive fundamentals including strong consumption and business spending.

"The perception of bad stuff has been priced in," Lynch said. "Interest rates, oil prices, yes, they could serve to limit growth. But I think investors are really thinking that this is all priced in. It's a day of clarity."

A report showing the U.S. economy expanded more quickly in the first three months this year than first estimated also lifted sentiment.

U.S. gross domestic product rose at a 4.4 percent annual rate, above an earlier estimate of 4.2 percent. The core price index for consumer spending -- a favorite of Federal Reserve Chairman Alan Greenspan that cuts out volatile food and energy prices -- gained at an annual rate of 1.7 percent, a downward revision from an originally reported 2.0 percent pace.

The GDP report "reflects continuing momentum in the economy," said William Dwyer, president of MTB Investment Advisors in Baltimore, Maryland. "It wasn't as high as they thought it would be, but it's still an increase, so the bottom line is that it was a positive."

Analysts said the market was already looking ahead to next week's jobless numbers for the next clues about how quickly the Federal Reserve may raise interest rates.

While many analysts are convinced the Fed will raise interest rates at its June 29-30 meeting to head off building inflation pressures, the rate hike will probably not be sharp, said Edgar Peters, chief investment officer at PanAgora Asset Management Inc.

"It is going to be a slow increase," Peters said. "I'm going back to thinking it's very possible that the Fed will raise by a very small amount -- maybe 10 basis points as opposed to 25."

A separate Labor Department (search) report showed the number of Americans filing initial claims for jobless aid fell by less than expected last week, but the four-week moving average, which shows underlying trends, remained near a 3-1/2 year low.

Boeing led the Dow's gainers, rising $1.44, or 3.2 percent, to $46.20.

Analysts predicted Boeing would eventually provide the Air Force with aircraft to replace its existing fleet, even after the Pentagon on Tuesday put off a decision on whether to reopen talks on a $23.5 billion plan to lease and buy refueling planes from the company.

Tyco International Ltd. (TYC) rallied to a fresh 52-week high of $30.98, after the conglomerate said it would use cash to pay off debt over the next several quarters, taking another step toward shedding the problems inherited from the tenure of former chief Dennis Kozlowski.

Shares of Tyco jumped $1.00, or 3.3 percent, to $30.95, their highest level since before Kozlowski left the company as chairman in 2002 as he faced securities fraud and other charges from New York prosecutors. That case ended in a mistrial in early April.

On the Nasdaq, Tech Data Corp. (TECD) jumped, a day after the company said strong results in Europe helped boost its quarterly earnings by 61 percent, beating Wall Street's most optimistic forecasts. Shares of Tech Data, the No. 2 computer products distributor, rose $3.99, or 11.3 percent, to $39.39.

Costco Wholesale Corp. (COST) stock also advanced, after the warehouse retailer said its earnings rose a better-than-expected 29 percent, well above estimates, driven by strong spring sales and better cost controls. Costco shares gained 63 cents, or 1.7 percent, to $38.07.

In corporate news, UBS said in its research note that Coca-Cola's (KO) "revamped strategy of premium innovation will drive higher revenues and profits in 2005 and beyond."

Home Depot Inc. (HD) gained 38 cents to $35.84 after the home improvement retailer announced that it was increasing its quarterly dividend by 25 percent and authorizing a $1 billion share repurchase plan.

Trading was active, with 1.44 billion shares changing hands on the New York Stock Exchange, in line with the 1.4 billion daily average for last year. About 1.63 billion shares were traded on Nasdaq, below last year's 1.69 billion daily average.

The Russell 2000 index of smaller companies rose 0.79, or 0.1 percent, to 568.56.

Overseas, Japan's Nikkei stock average rose 0.1 percent. In Europe, Britain's FTSE 100 closed up 0.3 percent, France's CAC-40 gained 0.5 percent for the session and Germany's DAX index was up 1.2 percent.

Reuters and the Associated Press contributed to this report.