Stocks rose significantly Thursday after upbeat financial reports from General Electric, Sears and other market bellwethers helped soothe investors' worries over corporate profits.

Wall Street's improved mood arrived just a day after Intel Corp. warned it was slashing 2002 capital spending, dampening hopes for a quick profit recovery and sending the market reeling.

The blue-chip Dow Jones industrial average climbed 137.77 points, or 1.42 percent, to 9,850.04, while the tech-heavy Nasdaq Composite rose 41.38 points, or 2.13 percent, to 1,985.82, bringing it back into positive territory for the year. The broad Standard & Poor's 500 advanced 11.31 points, or 1 percent, to 1,138.88.

"We're right in the midst of earnings season," said Rick Meckler, president of investment firm LibertyView. "The more companies that give their numbers, but more importantly, give guidance, it will mean a lot to the market moving forward, since everything else seems to be lining up."

General Electric, a component of the 30-stock Dow, rose $1.03 to $38.75, after the company said net profits rose 9 percent and it affirmed financial targets for 2002.

Sears, Roebuck and Co. , the No. 4 retailer, reported a 12 percent increase in net income, despite lower sales, a year after posting hefty charges to close 89 stores. Its shares gained $1.23 to $52.70.

United Technologies Corp. bolstered the Dow by surging $3.98 to $63.35. It posted a 19 percent drop in profits, but the diversified manufacturer and defense contractor reaffirmed its 2002 profit target and said it was comfortable with Wall Street's expectations for the first quarter.

Not all of the news was good. Ford Motor Co. lost 26 cents to $14.70 after the carmaker reported a net loss of $5.07 billion for the final quarter of 2001 compared with a year-ago net profit of $1.1 billion.

But upbeat news from computer makers Compaq Computer and Apple Computer sent investors racing to snap up stocks beaten down in Wednesday's sell-off.

Compaq edged up 63 cents to $11.80. The No. 2 personal computer maker said earnings, excluding items, fell sharply. But Compaq's results beat estimates and the company said first-quarter earnings would slightly surpass expectations. It also called for a recovery in technology spending during the second half of 2002.

Apple Computer posted a gain of 8 percent, or $1.70, to $22.48, after it posted a profit in line with expectations and a turnaround from its year-ago loss.

IBM rose $2.50 to $119.90 on the New York Stock Exchange, Microsoft added $1.99 to $69.86 and Intel eked out a gain of 82 cents to $34.53, both trading on the Nasdaq. All three stocks helped boost the Dow average.

Dow component Citigroup added $1.04 to $49.90, also boosting the Dow. The No. 1 U.S. financial services company said its quarterly profits rose as low interest rates drove up revenues at its consumer banking businesses.

Yahoo! Inc. rose $2.25, or 12.5 percent, to $20.12. The Internet media giant reported a net loss and said its sales fell sharply as it struggled with an extremely soft online advertising market. But the loss was narrower than expected and Yahoo also hiked 2002 sales estimates a little.

Good tidings came from lower-tier firms as well. Symantec Corp. surged $8.40 to $75.35. The anti-virus and computer security software firm reported its profit rose and beat estimates. It cited record shipments to consumers.

Investors on Thursday got a mixed bag of economic news.

The Federal Reserve Bank of Philadelphia said its January business conditions index, a gauge of the U.S. mid-Atlantic manufacturing sector, surged in January, showing growth for the first time in more than a year and lifting hopes for recovery in the recession-strapped sector.

Construction of new houses fell 3.4 percent in December, the government reported, but the housing sector -- aided by the lowest mortgage rates in a generation -- remained strong in 2001 despite the economy's tumble into recession.

On another upbeat note, the number of U.S. workers applying for state unemployment benefits fell 14,000 last week to 384,000, the lowest level in nearly six months.

"The important thing is the better labor market," said Peter Cardillo, chief strategist at Global Partners Securities. "If unemployment moves up but at a slower pace, that means that the economy is headed in the right direction and recovery can happen in the second half."

Advancing issues led decliners 3 to 2 on the New York Stock Exchange. Volume came to 1.36 billion shares, compared with 1.46 billion shares Wednesday.

The Russell 2000 index gained 5.97 to 482.39.

Overseas, Japan's Nikkei stock slid 0.5 percent. In Europe, Germany's DAX index advanced 3.0 percent, Britain's FT-SE 100 rose 0.2 percent, and France's CAC-40 gained 1.1 percent.

Reuters and the Associated Press contributed to this report.