NEW YORK, FEB. 11 -- Stock prices surged ahead today in heavy trading, extending one of the strongest rallies in memory in a fresh signal that Wall Street believes the recession could be over by summer.

Propelled again by falling interest rates and the ongoing conviction that the United States and its allies will win the Persian Gulf War relatively easily, the Dow Jones industrial average gained 71.54 points, breaking through 2900 and coming to rest at 2902.23.

{The Tokyo Stock Exchange, taking its cue from the steep climb in the Dow, also rose sharply Tuesday, the Associated Press reported. The 225-issue Nikkei stock average rose 638.93 points, or 2.63 percent, to close the day at 24,935.01. The index rose 191.65 points last Friday.}

On Wall Street, the day's increase marked an important symbolic and psychological breakthrough because it lifted the average more than 20 percent above its recent low point in October -- the traditional benchmark for declaring a "bull market" in which the long-term trend for stocks is up.

"This thing's for real," said Christopher B. Pedersen, senior vice president and director of trading at Twenty-First Securities Corp., an investment firm here that manages about $1 billion. "It's sort of like a rocket explosion. We all put on our seat belts and go for the ride."

Alan R. Shaw, a senior market analyst and managing director at the brokerage firm Smith Barney, Harris Upham & Co., said the relentless buying was "kind of like a feeding frenzy -- the only problem is that it hasn't had a chance to rest."

Shaw and other analysts say the market's gains have been fueled primarily by falling interest rates and the accompanying sentiment that cheaper money will pull the economy out of recession well before the end of the year.

A decline in interest rates is bullish for stocks because it makes it less attractive to keep money in bank accounts or other interest-paying investments. Lower interest rates also make it cheaper and easier for businesses to borrow money for expansion, raising the likelihood that the current business slowdown will be relatively mild and short and that corporate profits will soon rebound.

Much of the market's enthusiasm today came in response to moves by the Federal Reserve Board to pump additional money into the banking system, signaling a desire to see interest rates fall even further. As the Fed makes money more plentiful, competition for the funds among banks eases, permitting rates to fall.

"The Fed's just doing everything it can to get money back in the economy. That's really what's fueling the whole rally," Pedersen said.

In addition, the stock market is acting on the assumption that the U.S.-led alliance will win a relatively quick victory in the Persian Gulf War, according to stock traders and other Wall Street strategists.

Although stock prices have been drifting up gradually since October -- when the Dow touched its recent low point of 2365 on Oct. 11 -- the rally really took off with a 115-point gain on Jan. 17, the day after the war broke out. The Dow has risen 393 points since Jan. 16, and today closed for the first time higher than its level before Iraq's invasion of Kuwait on Aug. 2.

Since the war started, the optimism on Wall Street has continued to reflect the generally encouraging news from the front. But market analysts warn that the current rally will quickly turn to a rout if U.S. forces get bogged down in a lengthy ground offensive, or if the war news turns sour for other reasons.

Such herd instincts -- up and down -- are a venerable part of the Wall Street culture. Ever since the first reports were received of bombers over Baghdad, institutional money managers -- the people who invest big pools of capital for investors like insurance companies, pension funds, mutual funds and banks -- scrambled to buy up shares. For these professionals, egos, reputations, salaries and even job security all ride on not missing a stock market rally of several hundred points, and once the rally begins, the rush to get in on it becomes a self-perpetuating affair.

"It is a buying panic now among institutions to get their cash deployed," said Kent A. Kelley, an executive vice president of Travelers Investment Management Co. in Hartford, Conn., which manages $4 billion. "People are looking back and saying, this is another August 1982 {when the 'Reagan' bull market began}. They think the market is going to be up 30 percent, and say, 'I may have missed the first 15 percent of that rally, but by God I'm going to be in for the next 15 percent.' "

It was unclear to what extent small, individual investors were participating in the market's rally. Several Wall Street traders reported that institutions were by far doing most of the buying, but several mutual fund companies reported that individual stock owners had returned to the market in force.

Skeptics about the current rally contend that the recession may last into autumn or even next year and that in any case the recovery is likely to be weak. The dwindling number of naysayers, or bears, maintain that the recent gains are only a "sucker's rally," or a temporary rise in an overall downward trend.

But the optimistic bulls, following the longtime Wall Street adage of "never fight the Fed," are rushing to buy in response to the Federal Reserve's active efforts to lower interest rates.

Stock trader Pedersen conceded that "the fundamental economics aren't there yet" for a recovery from recession, but said that "with lower interest rates, everybody's betting the farm that things will improve."

The Dow's all-time high close was 2999.75, set in mid-July last year. Today's gains left the market just a fraction of a point shy of touching a new all-time record high as measured by another widely watched stock index, the Standard & Poor's 500. It rose 9.22 to 368.57 and was just a smidgen below its record of 368.95 set in July.

Volume was heavy, with 265.53 million shares changing hands on Big Board stocks, up from 187.84 million in the previous session.

Advancing issues outnumbered those declining by a ratio of about 9 to 2 in nationwide trading of New York Stock Exchange-listed stocks.

The Nasdaq composite index for the over-the-counter market added 7.30 to 444.10. At the American Stock Exchange, the market value index closed at 341.10, up 4.22.

Among individual issues, General Motors dropped 3/8 to 36 7/8 after Chairman Robert Stempel said U.S. car sales in the first quarter were running slower than in the fourth quarter of last year, for which the company is expected to report a large loss.

Marriott rallied 1 5/8 to 16 3/8 after brokerage firm Alex. Brown & Sons Inc. upgraded its investment rating to "strong buy."