Stocks rallied sharply for the first time in nearly two weeks as a government report of slower economic growth raised hopes that the Federal Reserve won't raise interest rates next week after all.

The Dow Jones industrial average rose 123.47 to close at 10,336.95, the index's second gain in eight sessions. It was also the Dow's biggest point gain since Sept. 3.

Broader indicators were higher as well. The Standard & Poor's 500-stock index rose 14.34, to 1282.71, and the Nasdaq composite index rose 15.89, to 2746.16.

Stocks rose after the Commerce Department reported that the U.S. economy, weighed down by record trade deficits, saw its growth slow to an annual rate of 1.6 percent during the second quarter, the lowest rate of expansion in four years.

The report on the nation's gross domestic product provided some relief for investors who have driven stocks lower over the past week as they pessimistically awaited the Fed's Oct. 5 meeting on interest rates.

Traders said some of today's buying was sparked by portfolio managers working to square their accounts for the end of the third quarter. That drew investors to shares that have held up well throughout the quarter, including Hewlett Packard, up 1 1/2 at 90 3/4, and Sun Microsystems, up 1 1/2 at 93-1/16. Apple Computer rose 4-3/16, to 63 1/4.

"The market has looked pretty lousy all week, and my sense is that the end of the quarter brought some people back into it today," said Ned Collins, a trader at Daiwa Securities America.

Cyclical companies, whose fortunes are tied to the economy, also fared well. General Electric rose 2 1/8, to 118-9/16, and 3M rose 2, to 96-1/16.

The Nasdaq's gains were hemmed in by some of its major technology names. slipped 15/16, to 79-13/16, after rising sharply on Wednesday.

Also, shares of companies that make computer chips tumbled, continuing to suffer from worries that last week's earthquake in Taiwan will hamper production. Applied Materials fell 2 1/8, to 77 5/8.

Shares of health maintenance organizations plunged after the Wall Street Journal reported that trial lawyers are preparing to launch class-action lawsuits against certain HMOs. United HealthCare fell 11-13/16, to 48-11/16, and Aetna fell 10-7/16, to 49 1/4.

The Dow lost 5.78 percent during the quarter but is still up 12.6 percent on the year. The Nasdaq managed a 2.2 percent rise for the quarter and is up 25.2 percent since Jan. 1, while the S&P, down 6.6 percent over the quarter, is still 4.4 percent higher for the year.