NEW YORK, OCT. 1 -- The stock market rose sharply today, extending the rally it began late last month with a lift from hopes for strong third-quarter earnings reports.

The Dow Jones average of 30 industrials jumped 42.92 to 2639.20, stretching its gain over the past eight sessions to 146.38 points.

Volume on the New York Stock Exchange reached 193.2 million shares, compared with 183.0 million in the previous session.

Analysts said traders were beginning to look ahead optimistically to corporate earnings reports for the third quarter, which ended Wednesday.

The figures, with a few notable exceptions, are expected to show more of the improving trend that began early this year.

Interest rates rose in the credit markets today, but settled back from their early highs.

Charles Jensen, an analyst at MKI Securities Inc., said hopes appeared to be spreading that bond prices were close to a turning point after their decline over the last six months.

Those hopes are pinned largely to signs that the dollar has stabilized in foreign exchange, and to expectations that forthcoming data on the nation's trade balance will show improvement.

Gainers among the blue chips included Ford Motor, up 3 1/8 at 101 1/8; Philip Morris, up 1 5/8 at 120 1/2; Eastman Kodak, up 3 7/8 at 105 3/4; International Business Machines, up 3 7/8 at 154 5/8, and American Telephone & Telegraph, up 1 at 34 3/4.

Buying spread into a broad range of industry groups, including such manufacturing sectors as forest products and chemical stocks.

In the paper and forest products group, International Paper rose 2 1/4 to 54 1/8; Boise Cascade 4 3/8 to 83 5/8; Weyerhaueser 1 3/8 to 53 1/2, and Louisiana-Pacific 1 1/4 to 39.

Among the chemicals, Du Pont picked up 1 to 120 1/8; Dow Chemical 2 to 107 5/8, and Monsanto 3 1/8 to 98.

Semiconductor and other technology stocks also were broadly higher. National Semiconductor, up 1 7/8 at 20 1/4; Texas Instruments, up 3 1/4 at 78; Motorola, up 3 3/8 at 73 1/4; Hewlett-Packard, up 2 at 72 1/2, and Compaq Computer, up 2 3/4 at 75 1/4, all touched new 52-week highs.

IBP Inc. traded at 19 after an initial public offering of 21.5 million shares at that price. In the offering, Occidental Petroleum sold a little less than a half interest in the company, which was once known as Iowa Beef Processors.

Advancing issues outnumbered declines by nearly 2 to 1 in the overall tally on the Big Board.

The exchange's composite index gained 2.73 to 182.97.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 223.84 million shares.

Standard & Poor's index of 400 industrials rose 6.35 to 382.20, and S&P's 500-stock composite index was up 5.50 at 327.33.

The Nasdaq composite index for the over-the-counter market added 4.16 to 448.45.

Prices were mostly higher in active trading of over-the-counter and American Stock Exchange issues.

Home Shopping led the Amex actives, rising 5/8 to 13 1/8. Bolar Pharmaceutical climbed 1 7/8 to 45 5/8. The company declared a 2-for-1 stock split.

The American Stock Exchange market value index rose 1.71 to 358.16. The price of an average Amex share rose 8 cents. But losers edged out gainers 319 to 316 among the 883 issues traded.

Amex composite volume totaled 12.8 million shares, compared with 14.1 million traded Wednesday