Wall Street finally got some traction over the past week as investors took comfort in the latest economic data and looked for signs that recent correction has run its course.
The Dow Jones Industrial Average gained 1.8 percent for the week to close Friday at 10,402.77, ending a six-week losing streak.
The Standard and Poor's 500 broad-market index gained 1.6 percent -- its best showing in seven weeks -- to 1,198.41.
The technology-heavy NASDAQ index added 0.37 percent to 2,089.88.
As the markets prepared to close out a nightmarish month -- with the broad market down 2.4 percent -- many analysts were interpreting the recent market action as traditional seasonal weakness that could lead to a year-end rally.
The market saw a strong rally Monday after the nomination of Ben Bernanke to replace Alan Greenspan as head of the Federal Reserve, on the assumption that he may be more stock-friendly.
The market gave back much of those gains by midweek but then staged a strong rally Friday in response to a report showing a US growth rate of a stronger-than-expected 3.8 percent.
In the market, "sentiment could be reversing," said Stephen Auth at Federated Investments.
"In the wake of hurricanes and soaring energy costs, investors had grown very gloomy, fueling a sharp correction," Auth added.
"October usually is a lousy month for stocks, and professional investors know it. Year-end rallies are fairly common, too -- something else professional investors know. With October nearing an end, market participants may have been positioning themselves for the Santa Claus rally they're hoping for," he said.
The strong economic report could be a catalyst for the market to build on its gains, some analysts said.
Avery Shenfeld at CIBC World Markets said the report showed a resilient economy.
"The weather huffed and puffed, but it couldn't blow the US economy down in the third quarter," he said.
"If storms took a percentage point or so off the economy's pace, the 3.8 percent quarter showing for real GDP growth has to be considered strong by all accounts."
Alfred Goldman at AG Edwards said the report showed strong growth and lower-than-expected inflation.
"This data shows that the rise in energy prices is not filtering into the broader economy and should dampen inflation fears," Goldman said.
Paul Nolte at Hinsdale Investments remains cautious about betting on a late-year rally.
"If we look at the commitment of traders, the large speculators have been selling the market hard over the past four weeks and at the heaviest level in over two years," he said.
"While we expect some higher prices in the weeks ahead, we may be using any ensuing rally to lighten our positions as investors reassess the economic strength of the US."
The Federal Reserve is expected Tuesday to lift its main rate by a quarter point for the 12th time in as many meetings, and issue an assessment of the economic outlook.
Bonds fell over the past week. The yield on the 10-year US Treasury bond rose to 4.567 percent from 4.4390 percent a week earlier while that on the 30-year bond climbed to 4.773 percent from 4.609 percent. Bond yields and prices move in opposite directions.