Stocks Up Worldwide Even as Rates Increase

The bulls were running in stock markets worldwide Thursday while the bears had control in bond markets.

Share prices surged in the U.S., Europe, Latin America and Asia amid fresh signs of strength in the global economy.

But those same signs caused some investors to sell bonds on fears of rising interest rates.

On Wall Street, the Dow Jones industrial average jumped 99.73 points, or 0.9%, to 10,809.47.

The broader Standard & Poor’s 500 index gained 9.15 points, or 0.7%, to 1,273.83. The technology-heavy Nasdaq composite was up 22.35 points, or 1%, to 2,283.

Winners topped losers by nearly 2 to 1 on the Big Board. Trading was heavy.

U.S. stocks got a lift from the government’s report that orders for durable goods rose 1.3% last month, topping economists’ consensus forecast and boosting optimism about capital spending.

“The durable-goods numbers are telling us that businesses are spending money and that the outlook for the economy is solid,” said Hugh Johnson, head of Johnson Illington Advisors.

A strong earnings report from heavy-machinery giant Caterpillar also underpinned hopes for a healthy economic expansion this year. Caterpillar’s fourth-quarter profit surged 54% to $846 million, or $1.20 a share, and the company said it was facing “unprecedented customer demand.”

Shares of Caterpillar, one of 30 stocks in the Dow, jumped $3.10 to a record $65.17.

One week ago today, the Dow slumped 213 points on worries about rising oil prices and disappointing earnings reports from blue-chip companies including General Electric.

Although investors have remained wary of some blue-chip issues this week, they have snapped up shares in sectors including natural resources, transportation, steel and industrial equipment.

Small-company stocks also have been hot. The Russell 2,000 small-stock index rose 1.7% to a record 728.48 on Thursday. Other indexes at all-time highs included the Dow transportation average and an index of 12 major brokerage stocks.

Foreign stock markets also posted hefty gains. Germany’s DAX index jumped 2.2% to 5,548.91, its highest close since 2001. A January business survey released Wednesday showed confidence there at the best level in more than five years.

France’s market rose 1.8%; the Italian market was up 1.6%.

Among Latin American markets, Mexico’s main index surged 1.9% to a record high.

Japan’s Nikkei 225 index rose 1.5% to 15,891, and South Korea’s main index was up 0.8%.

Rallies overseas this year, along with a weaker U.S. dollar, are lifting returns for Americans who own foreign stocks. Measured in dollars, the German market is up 5.9% this year, the Mexican market is up 9.1% and the Hong Kong market is up 4.3%. By contrast, the S&P; 500 index is up 2.1%.

While stocks rally, bond prices worldwide are falling -- driving yields up -- as investors worry that economic strength will mean tighter credit.

The Federal Reserve is expected to raise its key short-term rate from 4.25% to 4.5% on Tuesday. On Thursday, the benchmark 10-year U.S. Treasury note yield rose to a six-week high of 4.51% from 4.48% on Wednesday.

Among the day’s highlights:

* Aerospace stocks got a boost as Textron, Lockheed Martin and Honeywell reported strong earnings gains. Textron soared $7.69 to $83.64, Lockheed rose $1.98 to $66.99 and Honeywell added $1.35 to $37.41.

* Oil field services shares advanced as crude oil futures rebounded 41 cents to $66.26 a barrel in New York after losing $1.21 on Wednesday. Schlumberger jumped $3.64 to $124.34.

* Rising prices for metals, cement and other commodities continued to push up stocks in those sectors. Construction materials firm Eagle Materials rocketed $34.40 to $163.37 on its earnings report. Steel maker Nucor gained $3.08 to $80.42.

* First Data rose $2.30 to $45.30 after the electronic commerce firm said it would spin off its fast-growing Western Union unit.

* On the downside, Federated Department Stores slid $2.44 to $68.37 after issuing a 2006 profit forecast that was below analysts’ expectations. Computer networker Juniper Networks plunged $4.46 to $17.06 on its profit report.