NEW YORK (CNN/Money) - The Dow industrials rocketed to their highest point in three months Wednesday, while tech investors took the Nasdaq to a five-month high, as the festive mood had buyers feasting on big servings of stocks across the board.

Surging ahead 2.9 percent, the Dow Jones industrial average (up 255.26 to 8931.68, Charts) Wednesday notched the largest one-day bounce on the day before Thanksgiving. The day's advance included gains for all of the Dow 30 stocks.

The Nasdaq composite (up 43.51 to 1487.94, Charts), meanwhile, jumped more than 3 percent to reach its highest level in five months. The Standard & Poor's 500 index (up 25.56 to 938.87, Charts) rose more than 2.8 percent.

It was the Dow's highest close since Aug. 22, when the index ended at 9,053.64. The last time the Nasdaq finished higher was June 19, when it ended at 1,497.18.

With Wednesday's rally, the three major market indexes are on track for two consecutive monthly gains and an eighth straight weekly winning streak for the Dow as the blue-chip index inched closer to the 9,000 mark.

"There's a good shot that we'll pierce the 9,000 mark on Friday," Kenneth Polcari of Polcari/Weicker told CNNfn's Street Sweep. "We're up almost 20 percent for the Dow from the October lows. This runup is a great trading move, and the sense on the trading floor is that the market has made strong and steady progress and is building a base around the 8,500 range. But 9,000 is not unrealistic."

The bulls let loose after the raft of economic updates on employment, personal spending, manufacturing activity and durable goods orders all showed surprise improvements and gave investors more tangible evidence of economic growth and a recovery in corporate profits.

"Today we got preliminary signs that the worst may be behind us," said David Katz, stock market strategist with Matrix Asset Advisors. "Usually a bounce in technology usually happens about six months ahead of convincing evidence of a market recovery. We're getting a rally in techs and good news on the economy. I think we may be seeing a classic market recovery ahead of an economic recovery."

Positive momentum was reinforced later in the day after the Federal Reserve in its "beige book" survey said it found that "economic activity grew slowly" in late October and early November, with better retail sales countering weakness in manufacturing and business spending.

The survey is essentially a snapshot of where the economy stands in the Fed's 12 regional bank districts around the nation. Some analysts said the Fed's comments, combined with the day's upbeat numbers, could mean that the central bank will leave interest rates unchanged when policy-makers meet next month.

The central bank surprised the market with a hefty half-percentage point rate cut earlier this month, its first cut this year following 11 cuts in 2001.

Market breadth was positive. On the New York Stock Exchange, advancers beat decliners about 4 to 1 as 1.3 billion shares were traded. On the Nasdaq, advancers beat decliners better than 2 to 1 as 1.7 billion shares changed hands.

Despite the robust rally, trading volume was moderate ahead of the Thanksgiving holiday Thursday. U.S. financial markets are closed Thursday and put in only a half-session Friday.

Some positive business updates late Tuesday from Novellus Systems (NVLS: up $2.95 to $37.43, Research, Estimates) and Sun Microsystems (SUNW: up $0.21 to $3.97, Research, Estimates) buoyed technology stocks.

Chip equipment maker Novellus said it expects fourth-quarter revenue to be just shy of current estimates. Novellus's news lifted sectormates KLA-Tencor (KLAC: up $3.03 to $45.80, Research, Estimates), Applied Materials (AMAT: up $0.93 to $17.49, Research, Estimates) and Maxim Integrated (MXIM: up $2.27 to $43.38, Research, Estimates).

Sun Microsystems said it expects second-quarter revenue to be in line with forecasts but sees some weakness in its gross margins from the previous quarter. Sun also said it expects to return to profitability by the end of its fiscal year. Cisco Systems (CSCO: up $0.38 to $14.83, Research, Estimates) was the most active stock on the Nasdaq, followed by Sun Microsystems.

Shares of Chartered Semiconductor Manufacturing (CHTR: up $0.38 to $1.83, Research, Estimates) rose on the back of a deal with IBM (IBM: up $2.64 to $87.70, Research, Estimates) to share manufacturing facilities and co-develop chip technology. Soundview Technologies upgraded Chartered Semiconductor to "outperform" from "neutral."

But Triquint Semiconductor (TQNT: down $0.88 to $6.16, Research, Estimates) missed out on the tech euphoria after warning on its fourth quarter and first quarter of 2002.

IBM and 3M (3M: Research, Estimates) led the Dow winners amid a broad-based rally.

Drugmaker Eli Lilly (LLY: up $5.00 to $69.00, Research, Estimates) also boosted the broader market. The company won approval from the Food and Drug Administration for both Forteo -- its treatment of osteoporosis --and its drug Strattera for attention deficit hyperactivity disorder.

A drop in the latest jobs report set the ball rolling for the market surge early in the session.

Weekly jobless claims fell 17,000 to 364,000 in the week ended Nov. 23 from a revised 381,000 the prior week. Economists, on average, expected 383,000 new claims. It was the fourth week claims have stayed below the key 400,000 level, indicating a recovery in the nation's labor market.

Personal income in October rose an expected 0.1 percent, while personal spending rose 0.4 percent compared with a forecast for a 0.3 percent rise. It was the first time since July that consumer spending -- which accounts for roughly two-thirds of U.S. economic activity -- outpaced the rate of growth for personal income.

The National Association of Purchasing Management-Chicago's regional report on manufacturing activity for November was much stronger than forecasts at 54.3 compared with expectations for a rise to 48.5 from 45.9 the prior month. A level above 50 indicates expansion.

The October durable goods orders gave some more cheer to investors, showing a 2.8 increase compared with a forecast for a 1.8 percent increase. That was in sharp contrast to September's 4.9 percent drop.

"The numbers across the board were pretty surprising," said Hugh Johnson, market strategist with First Albany. "I would say that improvements in the leading indicators of the economy, like the employment and manufacturing numbers, is very encouraging and indicate that the economy is expanding and not contracting. It also suggests continued expansion into the first quarter."

European markets rallied to a close Wednesday. Stocks rose in Japan, but other Asian markets stalled.

Treasury prices fell, sending the 10-year note yield up to 4.26 percent from 4.06 percent late Tuesday. The bond market closed early to give investors an early jump on the Thanksgiving holiday. The dollar rose against the euro and the yen.

Light crude oil futures rose 46 cents to $26.89 a barrel in U.S. trading. Gold traded lower.