NEW YORK -- A sharp decline in oil prices and a surprise drop in wholesale prices pushed stocks higher yesterday as investors' concerns about third quarter earnings were mitigated. The Nasdaq composite index surged with investors buying heavily into an oversold technology sector.

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Oil prices fell briskly through the afternoon, again moving below $43 per barrel after spiking higher on Thursday. A barrel of light crude settled at $42.81, down $1.80, on the New York Mercantile Exchange.

Investors welcomed the 0.1 percent drop in the Producer Price Index, the Labor Department's measure of wholesale prices, since the news was a strong sign that the economy has still managed to keep inflation at bay despite this summer's rising oil costs.

A profit warning from Pittsburgh's Alcoa., which slashed its third-quarter forecast by about 40 percent, weighed heavily on investors' minds and kept the Dow Jones industrial average lower for most of the session. Alcoa, which fell $2.54 to $30.75, cited labor issues and plant closings and said it expects to earn 30 cents to 35 cents per share, far less than Wall Street's forecast of 52 cents a share.

Automotive systems manufacturer Visteon Corp.'s warnings also drove new fears about the health of the auto market and overall consumer spending. Visteon, which fell $1, or 11 percent, to $8, cited Ford Motor Co.'s cutbacks in production as a factor in taking a one-time charge of up to $900 million in the third quarter, and said profits in the second half of 2004 and for the full year will be "significantly below" expectations.

"I think investors have become a bit spoiled with all the positive pre-announcements and upside earnings surprises we've had over the last year," said Jack Caffrey, equities strategist at J.P. Morgan Private Bank. "It behooves companies to keep expectations reasonable. And we're still seeing profit growth, it's just that it's moderated."

Still, by the end of the day, the positive news on oil and inflation overcame the negative sentiment. On the day, the Nasdaq gained 24.66, or 1.3 percent, to close at 1,894.31; the Standard & Poor's 500 index rose 5.54, or 0.5 percent, to 1,123.92; and the Dow Jones industrial average ended up 23.97, or 0.2 percent, to 10,313.07.

For the week, the Dow rose 0.5 percent and the S&P was up 0.9 percent, while the Nasdaq soared 2.7 percent, though the tech-focused index remains down 5.4 percent for the year.

New uncertainties kept stocks volatile through the week, with concerns over employment, oil prices and earnings all weighing on Wall Street. Positive earnings outlooks from Nokia Corp. and Texas Instruments Inc. boosted long-suffering tech stocks and the Nasdaq, while blue chips suffered from muddled economic data and negative outlooks.

Yesterday's drop in wholesale prices was encouraging considering that, aside from food and oil prices, which can vary widely, the "core" PPI also fell 0.1 percent, showing that wholesale prices have become somewhat resilient to the high energy costs that have plagued Wall Street this summer.