NEW YORK (CNN/Money) - After rallying to their highest levels in nearly two months, U.S. stocks face a test Thursday and Friday amid a relentless volley of data on economic growth, the job market and manufacturing.

Stocks once again rose Wednesday after advances in chip stocks and IBM boosted techs and blue chips despite a downgrade for Wal-Mart.

The Nasdaq Composite (up 26.19 to 1326.73, Charts) closed 2 percent higher. The Dow Jones industrial average (up 58.47 to 8427.41, Charts) rose a modest 0.7 percent and the Standard & Poor's 500 index (up 8.56 to 890.71, Charts) closed up 0.9 percent.

The major indexes hit multi-year lows Oct 9. But a string of gains has brought the Nasdaq composite index near its best levels since Aug. 29. The Dow industrials are near their highest levels since Sept 11.

Strength in chip and networking stocks stood out among the broad-based gains for techs Wednesday, while positive words from IBM's CEO turned the tide for the Dow in the early afternoon after investors absorbed Wal-Mart's downgrade.

"When you see buying in that (technology) sector in a bear market, it implies that there are investors out there who see improvement around the corner, and it's usually technology and cyclical stocks that lead the market out of a downtrend," said Hugh Johnson, chief investment officer at First Albany. "The bias towards Friday's data may be that the data will be consistent with the view that the economy is showing some expansion."

Friday brings November readings on the unemployment rate, job creation and nationwide manufacturing.

Before that, on Thursday, economists surveyed by Briefing.com expected that gross domestic product grew at a 3.6 percent annual rate in the third quarter, up from the 1.3 percent growth in the second quarter.

In other Thursday data, the number of Americans filing for first-time jobless claims is expected to have risen by 2,000 to 400,000 last week, according to consensus forecasts

Chicago-area manufacturing is expected to have gained slightly in October. And the government's third-quarter employment cost index is seen gaining 0.9 percent following a 1 percent second-quarter advance.

More stocks rose than fell Wednesday. On the New York Stock Exchange, advancers beat decliners nearly 2 to 1 as 1.4 billion shares were traded. On the Nasdaq, winners also beat losers 2 to 1 as 1.6 billion shares changed hands

"The most notable pattern over this week is the market's resilience," said Richard Cripps, chief market strategist with Legg Mason. It's been able to digest some bad blows, like the turnaround for the Dow yesterday from its lows. Some of that also has to do with some large amount of short-covering activity," Cripps added.

Short covering occurs when traders who have been betting that stocks will continue to fall are forced to buy to cover their positions.

So far, October has been good for stocks, with the major indexes more than 10 percent higher after stocks locked in their third consecutive weekly advance last week. The three indexes together are on track for the first up month since March.

Among other factors that contributed to the market's gains was the fact that some mutual funds close their fiscal year in the September-October period. Those fund managers may look to buy stocks instead of holding onto cash in the final trading days of the month.

Analysts pointed out that speculation about the possibility of a Federal Reserve interest rate cut next week also fed the day's gains.

Rate-cut speculation picked up momentum after Tuesday's news that consumer confidence plummeted in October, raising concerns that the linchpin of the economy -- U.S. consumers -- is beginning to show signs of wear.

Some analysts said the market already has priced in a rate cut. Goldman Sachs said it expects a half-point cut when the central bank policy makers meet Nov. 6, citing the string of mostly disappointing data.

Upbeat comments from IBM (IBM: up $1.93 to $78.67, Research, Estimates) CEO Samuel Palmisano boosted the stock and injected cheer into the Dow. Palmisano said he sees signs that the economy has bottomed, based on feedback from IBM's international customers.

"Even though we're faced with some very difficult short-term economic circumstances, they (customers) are ultimately optimistic about the long term," Palmisano told a meeting of IBM customers in New York.

But a downgrade of Wal-Mart shadowed the Dow throughout the trading session.

Goldman Sachs cut its rating on Wal-Mart (WMT: down $2.67 to $53.80, Research, Estimates) to "market perform" from its "recommend" list. The brokerage house cited valuation concerns, saying it sees little upside for the stock, which has outperformed the S&P 500 by 26.8 percent over the past year. Wal-Mart led the Dow decliners.

General Electric (GE: down $0.70 to $25.15, Research, Estimates) and General Motors (GM: down $1.18 to $32.55, Research, Estimates) were two other Dow stocks taking a dip. GE said late Tuesday it expects losses associated with about $4.4 billion the company has tied up with struggling air carriers US Airways and United Airlines. In addition, GE said it may also have to write off about $800 million in investments held by its insurance businesses.

General Motors said it was extending through Jan. 2 its "triple zero" incentive program on most of its vehicles in a bid to offset sluggish automobile sales.

The Nasdaq found support from semiconductor, PC and gaming stocks. Chipmaker Maxim Integrated (MXIM: up $3.29 to $32.72, Research, Estimates) late Tuesday posted a first-quarter profit that met Wall Street estimates.

Banc of America upped its stock price target on Dell Computer (DELL: up $0.40 to $29.06, Research, Estimates) to $34 from $30, saying the computer maker's foray into the storage area could enable it to "profitably expand the market opportunity and diversify its revenue." The firm maintained a "buy" rating on the stock.

Shares of Activision (ATVI: up $2.11 to $20.32, Research, Estimates) were boosted after the No. 2 independent video game publisher posted a first-quarter profit Tuesday that trounced Wall Street estimates and also gave a bullish forecast for fiscal 2003.

European bourses closed higher, while Asian-Pacific stocks ended mixed Wednesday, with Japan's Nikkei index up 0.6 percent.

Treasury were mixed, with the yield on the 10-year note at 3.96 percent. The dollar was weaker against the yen and the euro.

Light crude oil futures down 5 cents to $26.81 a barrel in U.S. trading. Gold fell.