Updated from 4:06 p.m. EDT

Stocks finally delivered on an early-session bounce Tuesday, extending gains throughout the day amid more positive earnings and economic reports, leading investors to wonder whether conditions were ripe for a sustained rally off some of the lowest price levels of 2004.

The Dow Jones Industrial Average reclaimed its 10,000 mark, adding 123.22 points, or 1.24%, to 10,085.14; the S&P 500 rose 10.76 points, or 0.99%, to 1094.83; and the Nasdaq Composite closed up 30.08 points, or 1.64%, to 1869.10. Both the S&P and Nasdaq were coming off new lows for the year. The 10-year Treasury note was trading down 29/32 to yield 4.60%, while the dollar was higher against the yen and the euro.

In New York, oil futures were trading up 36 cents to $41.80 a barrel.

"In the last few weeks, we've been moving towards the low end of the trading range where people who feel that earnings fundamentals are good enough that the market shouldn't weaken more step in, but at the upper end, they don't have the conviction to take it to higher levels," said Subodh Kumar, chief investment strategist with CIBC World Markets.

Volume was decent for a summer session, with more than 1.6 billion shares traded on the New York Stock Exchange and 1.7 billion on the Nasdaq, and advancers were around double the decliners on both exchanges.

"Despite the point gains you're seeing today, the jury is still out on whether this is just a relief rebound rally or the start of something significant," said Richard Dickson, senior strategist at Lowry's Reports. "Certainly, I'd give it a few days, but if by the end of the week, demand and volume don't show a significant rise and the market is still going up, then I'd have to say that we're probably looking at something like the rebound off the March lows that lasted a couple of weeks and then fizzled out."

Particular strength showed up in biotechnology, retail, oil services and technology software and hardware.

On the economic front, the Conference Board said its consumer confidence index jumped more than expected in July to a two-year high, at 106.1, up from a revised 102.8. Separately, existing home sales rose unexpectedly in June, according to a government report. Sales reached an annualized 6.95 million, up from a revised 6.81 million in May. Economists expected the figure to drop to 6.65 million.

Brian Williamson, an equity trader with Boston Company Asset Management, noted that stocks picked up some early momentum after the news came out about consumer confidence, but he said gains were mainly due to a technical bounce off the market lows.

"After a lot of profit-taking, I think the market finally found a level where we'll start seeing a lot of buying," Williamson said.

Strategists on Wall Street will keep an eye on events in Boston, where the Democratic Convention continues for its second day, looking for any sign that the party's presumptive nominee, John Kerry, is strengthening or weakening his bid for the presidency. With polls showing the senator from Massachusetts in a virtual dead heat with the incumbent, President Bush, market watchers say that uncertainty about the election's outcome has stifled investor confidence.

Trip Jones, managing director with SunGard Institutional Brokerage, said any progress made by Kerry in pressing his case to swing voters is a drain on the stock market, because the policies Kerry is likely to adopt in taxes, trade and the war on terror, would hurt corporate America's bottom line.

The Bush tax cuts, particularly the lowering of dividend tax rates, received rave reviews on Wall Street, and Jones said that any rollback in those cuts will be viewed as an economic drag. He also said that the protectionist rhetoric of the Democrats also threatens the nation's free-trade relationships on which major corporations are increasingly dependent, and while Kerry has criticized the President's prosecution of the war on terror, he has offered no credible alternatives.

"When Bush's standing falls, the stock market falls, too," Jones said. "The more chance there is for Kerry to win, the less the market is going to like it."

Barry Ritholtz, chief market strategist with Maxim Group and contributor to RealMoney, acknowledged that Wall Street has historically been inclined to support Republicans, but he rejects the idea that recent losses in the market have anything to do with the progress of John Kerry.

"Mr. Market doesn't care about baseball, he doesn't care who wins the Super Bowl, and quite frankly, Mr. Market doesn't care who wins the election," Ritholtz said. "Markets are a future discounting mechanism. They look forward and ask, 'Is the economy expanding faster, expanding slower or contracting?' Now, the markets see a slowdown coming, and the market has pulled back and the President's popularity wanes as well."

Ritholtz pointed out that many investors look back with nostalgia at the presidencies of Ronald Reagan and Bill Clinton, both times when the market flourished. "The common theme between those two were divided government, with one party controlling either all or some of the congress, and the other party controlling the White House," he said. "That forces both parties to move towards the center in a bipartisan fashion and to not strictly pursue an ideological agenda."

Among earnings Tuesday morning, Verizon Communications ( VZ) reported a jump in second-quarter earnings -- thanks to strong revenue from its wireless division, beating Wall Street's expectations. The telecommunications giant earned $1.8 billion, or 64 cents a share. That's up from the year-ago $338 million, or 12 cents a share. Its stock closed up $1.35 cents, or 3.7%, to $37.85.

Lockheed Martin's ( LMT) profits rose more than expected in its second quarter, up 22% on sales of its fighter jets. The defense contractor posted net income of $296 million, or 66 cents a share, compared to $242 million, or 54 cents a share, in the year-ago period. Its stock ended up 24 cents, or 0.5%, to $52.44.

Advertising giant Omnicom ( OMC) said second-quarter net income was $206.1 million, or $1.10 a share, compared with $180 million, or 96 cents a share, last year. Analysts had been forecasting $1.07 a share in the latest quarter. Its shares closed up 15 cents, or 0.2%, to $69.55.

Health maintenance organization Anthem ( ATH) earned $237.9 million, or $1.66 a share, in the latest quarter, compared with earnings of $177.3 million, or $1.25 a share, last year. Analysts had been forecasting earnings of $1.63 a share in the latest quarter. Its stock closed down $6.56, or 7.4%, to $81.60.

DuPont ( DD) earned $503 million, or 50 cents a share, in the second quarter, compared with earnings of $675 million, or 67 cents a share, last year. The latest quarter included a restructuring charge, excluding which DuPont earned 80 cents a share, a penny short of estimates. The company said revenue rose 2% to $7.5 billion and raised full-year guidance by about 10 cents a share. Its shares ended up 40 cents, or 0.9%, to $42.30.

Overseas markets were mixed, with London's FTSE 100 closing up 0.9% to 4325 and Germany's Xetra DAX adding 1.6% to 3814. In Asia, Japan's Nikkei fell 1.2% overnight to 11,032, while Hong Kong's Hang Seng slid 0.2% to 12,301.

More than 70 companies are scheduled to report quarterly results before Wednesday's open, including Boeing ( BA), Time Warner ( TWX), First Energy ( FE) and Hilton Hotels ( HLT).

At 8:30 a.m. EDT, the government is expected to report that orders for durable goods rose by 1.5% in June after declining by 1.6% in May. Then at 2 p.m. EDT, the Fed will release its so-called beige book report on economic conditions throughout the country.

Sometime during the session, a second-quarter earnings report is due from Anheuser-Busch ( BUD), expected to have earned 83 cents a share for the quarter before special items, up from last year's 75 cents a share.

After the bell, 85 more companies will announce results, including MetLife ( MET), EDS ( EDS), Fisher Scientific ( FSH) and Express Scripts ( ESRX).