Stocks Surge on Jobs, Retail Sales

A wave of upbeat economic and corporate reports sent stock prices surging Thursday, but the market gave back most of the gains by the close.

Still, the rally was enough to push the Dow Jones industrial average to a 15-month high and the Nasdaq composite to a 19-month high. It was one year ago Thursday that most major indexes hit their bear market lows.

In other trading, the economic news drove Treasury bond yields higher and helped to support the struggling dollar.

On Wall Street, the day opened with strong September sales data from major retailers and the government’s report that new claims for unemployment benefits last week were lower than most estimates.

What’s more, investors were still digesting a better-than-expected third-quarter earnings report from Internet bellwether Yahoo, released after regular trading ended Wednesday.

The Dow rocketed 138 points, or 1.4%, in the first two hours of trading. But the rally then lost steam, and a selling wave hit that some traders said was led by a large computerized “program” trade from a big investor.

At the close the Dow was up 49.11 points, or 0.5%, at 9,680.01. That still was good enough to eclipse the previous 15-month high of 9,659.13 set on Sept. 18.

The Nasdaq composite, up as much as 43 points Thursday, ended with a gain of 18.12 points, or 1%, at 1,911.90. That beat the Sept. 18 finish of 1,909.55.

The Standard & Poor’s 500 index rose 4.95 points, or 0.5%, to 1,038.73, just shy of its September peak of 1,039.58.

“It was a very unsatisfying close,” said Phil Roth, market analyst at Miller Tabak & Co. in New York. He disputes the idea that the market has been seeing a rush of new investors in recent months. Instead, Roth believes the market is largely in the hands of traders.

The S&P; index is near a new 52-week high, Roth said, but it has risen just 2.7% since June 17. The market has a “slight upward bias,” but that’s the best one can say about it, he said.

Other analysts take a much more bullish view, noting that the market’s advance remains broad-based, encompassing stocks of all sizes.

On Thursday winners outnumbered losers by 20 to 12 on the New York Stock Exchange and by 19 to 13 on Nasdaq, in active trading. S&P;’s indexes of small and mid-sized stocks both closed at their highest levels since spring 2002.

Retail, airline and some heavy-industry stocks were particularly hot. All three sectors would benefit from a rebounding economy. Kmart soared $2.75 to $28.55, Continental Airlines jumped $1.72 to $21.25 and Deere gained $1.37 to $57.87.

“There are a lot of dollars looking for a home” in the stock market, said Marc Pado, market strategist at Cantor Fitzgerald.

He said Yahoo’s report Wednesday of a surge in online advertising sales helped bolster the view that the economy is accelerating. Yahoo rocketed $3.96 to $42.75. It is up 161% this year.

Many investors are betting that third-quarter corporate earnings reports overall will beat expectations and justify the jump in stocks since March.

But optimism about the economy continues to hurt the bond market by pushing interest rates up. The 10-year Treasury note yield rose to 4.29% from 4.24% on Wednesday.

The dollar was mixed, falling to a three-year low against the yen but edging up against the euro. Treasury Secretary John W. Snow, rebutting common wisdom on Wall Street that the Bush administration wants a weaker dollar, told a Boston interviewer that the administration had not departed “one iota” from favoring a strong buck.

In commodities trading, near-term crude oil futures in New York jumped $1.20 to $31.01 a barrel, a one-month high, on news that U.S. heating oil inventories declined last week, even though crude inventories rose.