Despite rising oil prices, U.S. stocks this week had their biggest rally since October, as investors reacted to some positive economic indicators, the easing of tensions in Iraq and Google Inc.'s unexpectedly strong performance after going public.

"The market got oversold and got turned around this week for a new rally phase," said Dick McCabe, chief market analyst with Merrill Lynch.

The Dow Jones industrial average was up 69.32, or 0.7 percent, at 10,110.14; Standard & Poor's 500-stock index was up 7.12, or 0.7 percent, at 1098.35; and the Nasdaq composite index gained 18.13, or 1 percent, to 1838.02.

And all three major stock indicators were up at the week's close. For the week, the Dow rose 2.9 percent, finishing a week above 10,000 for the first time this month; the Nasdaq rose 4.6 percent; and the S&P 500 climbed 3.2 percent, its biggest gain since the week of Oct. 3, 2003.

"When the Dow gets below 10,000, money on the sidelines thinks about coming back in," said Michael Goldstein, finance professor at Babson College in Wellesley, Mass., and a former investment banker with Merrill Lynch.

David Wyss, an economist with Standard & Poor's Corp., said the economic outlook helped spur the market.

"There were a lot of small positives: strong earnings numbers, a better-than-expected housing report, and the inflation number came in lower than expected, suggesting the Fed didn't have to be quite so quick to tighten interest rates," Wyss said.

Crude oil prices neared $50 a barrel late this week after steadily climbing for seven days. But prices dropped yesterday. News that tensions in Iraq had eased calmed fears about attacks on the country's oil infrastructure and tight supplies.

Vahan Janjigian, vice president of Forbes Investors Advisory Institute, said high oil prices had been dragging down the market.

"Oil prices and the market have been negatively correlated in the last few months -- oil goes up and the market goes down," Janjigian said. "Oil prices going up is not a good thing, but it's nice to see stock prices going up anyway."

According to Janjigian, Google's immediate post-IPO performance encouraged investors, especially those buying tech-related stocks.

Google's share price grew from $85 to just over $100 on its first day of trading Thursday. The stock closed at $108.31 yesterday.

"The fact that Google was able to go public and saw a nice, first-day pop gave investors confidence and brought them back into the market," Janjigian said.

Analysts say a third-quarter market slump is common, but things tend to improve in a presidential election year. "August is generally a wishy-washy month," Wyss said. "After the election, things will start to improve."

But Goldstein has a slightly more cryptic view of the market trends -- he doesn't expect it to truly pull out of its funk for a few years.

"It's like Joseph's dream in the Bible: We had seven fat years and we're now in the midst of our seven lean years," Goldstein said. Optimistically, he added, "we are more than halfway through."

Other Indicators

* The New York Stock Exchange composite index rose 42.04, to 6414.67; the American Stock Exchange index rose 4.04, to 1225.99; and the Russell 2000 index of smaller-company stocks rose 10.48, to 547.92.

* Advancing issues outnumbered declining ones by 3 to 1 on the NYSE, where trading volume fell to 1.19 billion shares, from 1.25 billion Thursday. On the Nasdaq Stock Market, advancers outnumbered decliners by 42 to 1 and volume totaled 1.33 billion, down from 1.4 billion.

* The price of the Treasury's 10-year note fell $1.25 per $1,000 invested, and its yield rose to 4.23 percent, from 4.22 percent on Thursday.

* The dollar fell against the Japanese yen and rose against the euro. In late New York trading, a dollar bought 109.19 yen, down from 109.32 late Thursday, and a euro bought $1.2307, down from $1.2367.

* Light, sweet crude oil for September delivery settled at $47.86, down 84 cents, on the New York Mercantile Exchange.

* Gold for current delivery rose to $413.20 a troy ounce, from $407.10 Thursday, on the New York Mercantile Exchange's Commodity Exchange.

Traders work the crude oil trading pit of the New York Mercantile Exchange. Crude futures fell after surging to records this week.