Stocks & Bonds: A Big Rally As Two Worries Ease A Bit

Wall Street shot higher on Thursday as investors saw a rising dollar and falling oil prices as promising signs for the economy.

The Dow Jones industrial average soared nearly 190 points to close above 13,000 for the first time since January.

The dollar jumped on better-than-expected economic data and the Federal Reserve’s apparent resolve to keep inflation in check. The Commerce Department said consumer spending rose 0.4 percent in March, more than predicted, and the Institute for Supply Management said American manufacturing contracted in April by a bit less than forecast.

The readings were not all positive; the uptick in consumer spending was mostly because of rising energy and food prices. The I.S.M.’s report also indicated that companies were hurting from climbing costs.

But the dollar, which has been strengthening recently after a protracted decline, rallied anyway, pushing the euro down more than 1 percent, to $1.5461 in late trading.

Trading was thin, with major currency markets in London and elsewhere closed for the May Day holiday, but the dollar’s advance helped crude oil fall briefly near $110 a barrel and then settle at $112.52. That eased some of the inflation-related anxieties in the market, given that crude recently traded at a record near $120 a barrel.

The Dow closed up 189.87, or 1.48 percent, to 13,010.00, after briefly rising more than 200 points. It had not closed above 13,000 since Jan. 3, when it ended at 13,056.72; the Dow is still down 8.15 percent from its record close of 14,164.53, reached on Oct. 9, 2007, before the brunt of the credit crisis hit Wall Street.

The Standard & Poor’s 500-stock index rose 23.75, or 1.71 percent, to 1,409.34, its first settlement above 1,400 since Jan. 14. The Nasdaq composite index climbed 67.91, or 2.81 percent, to 2,480.71, its highest close since Jan. 10.

The Russell 2000 index of smaller companies rose 13.57, or 1.89 percent, to 729.75.

“What we’re seeing is that maybe the economy is not falling off a cliff, but perhaps leveling off,” said Peter Cardillo, chief market economist at the New York-based brokerage house Avalon Partners.

Banks, home builders, chip makers and retailers surged after being battered this year.

The price of the benchmark 10-year Treasury note fell 9/32, to 97 27/32. Its yield, which moves opposite its price, rose to 3.76 percent, from 3.73 percent.

Gold prices dropped as the dollar moved higher against other currencies.

The Labor Department’s employment report on Friday is expected to show a net loss of 75,000 jobs for April — the fourth consecutive month of decline — and a rise in unemployment to 5.2 percent, from 5.1 percent in March.

But with government stimulus checks being sent to taxpayers and Fed rate cuts still working their way through the financial system, many investors are focused on the second half of the year when they are betting the economy will rebound.

Shares of Exxon Mobil, one of the 30 Dow components, declined $3.37, or 3.6 percent, to $89.70, after it said its first-quarter profit rose 17 percent, to $11 billion — not as high as analysts expected, despite record-high oil prices. Lower production volumes caused the company’s profit margins to shrink.

Citigroup rose $1.04, or 4.1 percent, to $25.99; Bank of America was up $1.85, or 4.9 percent, to $39.39; and JPMorgan Chase added $1.60, or 3.4 percent, to $49.25.

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