NEW YORK (CNN/Money) - U.S. stocks soared Friday as the country's armed forces staged a massive offensive against Iraq and Wall Street made bets that the war will be won soon.

The Dow Jones industrial average (up 235.37 to 8521.97, Charts) rose more than 2.8 percent and the S&P 500 index (up 895.90 to 895.90, Charts) added 2.3 percent. The Nasdaq composite (up 19.07 to 1421.84, Charts) earned smaller gains, adding 1.3 percent. Both the Dow and the S&P climbed back into positive territory for the year Friday, joining the Nasdaq, which hit that milestone late last week.

The Dow rose for the eighth consecutive session, its best performance since November 1996, when it rallied for 10 days in a row. With a rise of 8.4 percent, the blue-chip average also saw its best weekly gain since October 1982, when it rose 8.7 percent. The industrials have climbed 13.3 percent since March 12.

For the week, the Nasdaq gained 6 percent, while the S&P 500 added 7.5 percent.

War optimism boosted the U.S. dollar versus other currencies and pried money away from bonds, oil, and gold, further supporting an equity rise. A morning "Saddam is dead" rumor reported on the BBC, and the afternoon start of the accelerated "shock and awe" phase of the military campaign, only added to the advance.

"I think investors are reacting positively to what's going on right now, with this new phase of the war," said Tom Schrader, head of listed trading at Legg Mason. "The more certain investors are that things are going well -- and they seem to be going very well -- the more hints we have that Saddam may be dead, the more investors are going to jump in."

Next week is heavy on economic data, with investors taking in reports on consumer confidence, existing and new home sales, durable goods orders, personal income and spending, and final revisions of fourth-quarter gross domestic product growth and the University of Michigan's consumer sentiment index.

Next week also brings earnings from Goodyear Tire (GT: up $0.74 to $5.35, Research, Estimates), El Paso (EP: down $0.27 to $6.13, Research, Estimates) and Walgreen (WAG: up $1.00 to $31.82, Research, Estimates).

The market, which had seen a slow but steep decline as preparations for war went on, began its ascent once investors learned that war was certain and about to start. Once bombing started, Wall Street bounced around on every news report and rumor coming from Iraq, but still found its way to a positive close Thursday, the first full day of military action.

Traders showed much stronger conviction Friday with the start of massive bombing over key Iraqi cities. Reports the U.S. military was meeting little resistance in its march toward Baghdad and in its effort to secure Iraqi airfields and oil fields added to the bullish sentiment. Only two U.S. combat casualties have been reported so far, and pictures of Iraqi soldiers surrendering in droves and U.S. tanks advancing through the desert seemed to send buy signals through the market. (For the latest coverage of the war, go to CNN.com.)

Some on Wall Street still expect a heightened level of volatility in the coming sessions as the market seesaws with every rumor that Iraqi President Saddam Hussein is dead, injured or deposed. The expiration Friday of stock and stock index futures and options failed to add to the jittery atmosphere.

"I think the stock action has been very positive," said Michael Carty, principal at New Millennium Investors. "It's getting to the point where people are more afraid of being out of the market than getting in it."

Although overshadowed by the war focus, the session also brought some interesting corporate news. Shares of CNN/Money parent AOL Time Warner (AOL: down $0.01 to $11.45, Research, Estimates) recovered almost all of its early 3 percent slide after Liberty Media (L: up $0.49 to $10.25, Research, Estimates) said Thursday that it plans to raise up to $1.75 billion from bonds that are exchangeable into AOL Time Warner stock, to bolster its acquisition war chest. AOL Time Warner was the NYSE's most active issue.

Notwithstanding AOL's token loss, most media stocks gained ground throughout the day, including Dow component Walt Disney (DIS: up $1.60 to $18.74, Research, Estimates), which rose more than 9 percent and was the best performer on the blue-chip index. On the Dow industrials, 29 of 30 issues rose, with Dow stock DuPont (DD: up $2.04 to $41.64, Research, Estimates) up more than 5 percent after the company reaffirmed its previous earnings forecast for the current quarter. Telecom SBC Communications (SBC: down $0.13 to $21.64, Research, Estimates) was the lone decliner.

Although more of the buying was in blue chips than technology, a number of large-cap tech stocks also advanced, with Intel (INTC: up $0.63 to $18.90, Research, Estimates) up more than 3 percent and Dell Computer (DELL: up $0.68 to $28.78, Research, Estimates) and Applied Materials (AMAT: up $0.32 to $14.23, Research, Estimates) up more than 2 percent.

On the downside, shares of accounting software maker Intuit (INTU: down $12.17 to $38.72, Research, Estimates) fell nearly 24 percent in active trade on the Nasdaq after the company warned late Thursday that earnings and revenue targets for 2003 won't meet estimates, due to sluggish sales amid the economic slowdown.

Market breadth was overwhelmingly positive on both the New York Stock Exchange and the Nasdaq, and volume continued to improve from the market's prewar days. Some 1.80 billion shares traded on the NYSE, where gainers outnumbered losers by more than 11 to 5. About 1.81 billion shares changed hands on the Nasdaq, with advancers beating decliners by more than 5 to 3.

Volume may have been boosted by the fact that Friday was a "quadruple witching" day, traders said, with the expiration of futures options, equity options and index options, as well as individual stock futures.

The stock market's winning run led to a continued rise in the yields of U.S. Treasury bonds. The benchmark 10-year note lost 1-3/32 of a point in price, propelling its yield up to 4.10 percent. When a bond price falls, it pushes the yield higher. The dollar hit a three-month high against the euro and also rallied versus the yen.

Friday's economic report, suggesting that inflation at the consumer level picked up amid the rising cost of energy products recently, did little to influence Wall Street's direction.

This was partially because oil prices continued their decline that began just before the start of the war. Light crude futures fell $1.34 to $26.91 a barrel in New York. Gold plunged $6.90 an ounce in New York to trade at $326.10.

Stocks in Europe rallied and Asian markets, with the exception of Tokyo, which was closed for a holiday, also closed mostly higher.