2-WEEK SURGE CAPS WILD OCTOBER RIDE FOR MARKETS.

Byline: Eileen Glanton Associated Press 

Can we breathe now?

The stock market wrapped up the notoriously treacherous month of October with a solid rally that heartened analysts with its breadth and depth. After rising 259.61 points this week, on top of last week's 450-point surge, it's hard to remember that the Dow briefly tumbled below 10,000 at midmonth and that some analysts were predicting the end of the bull market.

``Crow is probably a popular menu item for several bearish market observers out there,'' said Brian G. Belski, chief investment strategist at George K. Baum & Co. in Kansas City, Mo.

In the past week, investors bought stocks following a wave of encouraging news about the economy. On Thursday, the Commerce Department said the nation's gross domestic product revived over the summer after a sluggish spring, putting the economy on pace for 4.8 percent annual growth.

That's a stronger expansion than many economists had expected. On any other day, the report might have prompted a selloff in stocks, fueling fears that the Federal Reserve will raise interest rates again this year to slow growth to a sustainable level.

But on Thursday, investors brushed off the strong GDP figure in favor of a more benign report on employment costs. The Labor Department said its Employment Cost Index, considered the best measure of changes in wages and benefit costs, rose 0.8 percent in the third quarter. That was less than many economists were forecasting.

And it proved to be all the market needed. Stocks soared, with the Dow gaining a total of 334.97 points Thursday and Friday. The Nasdaq rose 163.91 points, closing at a new record of 2,966.43 on Friday. Bond prices improved, too, providing additional support for the equity market.

The employment cost report doesn't mean the Fed will leave rates unchanged when its Open Market Committee meets on Nov. 16. But analysts say it reassured investors that if the Fed does raise rates, the increase will be the last for a while.

``Fear of higher interest rates had reached an extreme,'' said Alfred E. Goldman, chief market strategist at A.G. Edwards & Sons Inc. in St. Louis. ``We think that's over.''

Fed Chairman Alan Greenspan somewhat unwittingly spurred Friday's market gains. In a characteristically cautious speech Thursday night, Greenspan said continuing advances in productivity have spurred the economy's growth while keeping inflation under wraps. Yet he questioned how long the gains can continue.

``The rate of growth of productivity cannot continue to increase indefinitely,'' he said. ``At some point it must, at least, plateau.''

But Greenspan also suggested that the central bank's two interest rate hikes this year seem to be keeping inflation under control. Without any blatant hints of another rate increase, investors rejoiced anew.

Economic news aside, analysts were encouraged by several signs that the market's overall health is improving. For example, there was a sign of conviction in the rally at week's end, with trading exceptionally heavy both Thursday and Friday.

Analysts were equally encouraged that the market's rise was broad-based.

In recent months, even as market averages worked their way to new records, most stocks faltered. That troubled analysts who use breadth - a ratio of stocks that advance to those that decline - as a key barometer of market strength.

But this Thursday and Friday, advancers easily outnumbered decliners, suggesting that the rally wasn't restricted to the biggest, hottest technology companies.

In fact, some major technology names suffered this past week. Online auctioneer eBay and online retailer Amazon.com both fell after releasing earnings reports that beat analysts' expectations.

But both companies paid a price for rapid expansion. EBay's profit margin decreased, and the company said its new users are making fewer transactions, raising concerns about future revenues. Meanwhile, Amazon said its losses more than tripled from a year ago as the company spent heavily to expand its online offerings.

In the market's headiest days, many investors looked past heavy losses, bidding Internet stocks higher on the promise of future growth. This week, investors appeared a bit more judgmental, analysts said.

``Folks are looking at fact rather than fiction,'' Goldman said. ``It was a more intelligent market.''

This past week, the Dow rose 259.61 points. A gain of 107.33 on Friday left the blue-chip index at 10,729.86.

Next week, the Dow will have a new look, as Intel, Microsoft, Home Depot and SBC Communications join the index. In an effort to reshape the Dow to reflect the dominance of technology, editors of The Wall Street Journal chose those four stocks to replace Chevron, Goodyear, Sears Roebuck and Union Carbide.

The Standard & Poor's 500 rose 61.28 on the week, gaining 20.49 Friday to end at 1,362.93.

The Nasdaq composite rose 149.91 during the week to 2,966.43, after rising 91.21 Friday.

The Russell 2000 index, which reflects the performance of smaller companies, rose 9.95 on the week, closing at 428.64. The index rose 5.83 on Friday.

The Wilshire Associates Equity Index, which represents the combined market value of all NYSE, American and Nasdaq issues, ended the week at $12.449 trillion, up $574.20 billion from last week. A year ago, the index was $9.750 trillion.