NEW YORK – Stocks rose in light trading Wednesday as a tumble in oil prices offset a pair of government reports that offered conflicting signals about the economy, but thin volume meant dealers were skeptical about the strength of the rally.
The Dow Jones industrial average (search) rose 83.11 points, or 0.82 percent, to 10,181.74. The Standard & Poor's 500 Index (search) gained 8.77 points, or 0.80 percent, to 1,104.96. The technology-laced Nasdaq Composite Index (search) advanced 23.83 points, or 1.30 percent, to 1,860.72.
Boeing (BA) helped push the Dow and S&P higher after Singapore Airlines Ltd. said it plans to buy up to 31 Boeing long-range 777-300ER planes worth about $7.35 billion. Boeing rose $1.59, or 3.12 percent, to $52.50.
But oil continued to be the focus and fueled market strength as October crude futures tumbled nearly $2 to end below $44 a barrel on the New York Mercantile Exchange (search) amid a fall in the price of gasoline.
High oil prices concern investors because of the impact increased costs have on corporate profit margins and consumer spending. A drop in the crude price generally boosts stocks.
"Oil is significantly off its recent highs, so that will lessen people's anxieties about oil and its effect on the economy," said Tom Schrader, managing director, U.S. equity trading at Legg Mason Wood Walker in Baltimore.
The sell-off in oil helped push the blue-chip Dow to its highest close in more than a month, while the S&P and Nasdaq were back to levels seen at the beginning of August.
The moderate buying surge was welcome on Wall Street, where investors have been in no hurry to commit new money to stocks. Many have stuck to the sidelines in the face of a long list of worries, including volatile oil prices and persistent terror fears. Contributing to the session's light volume, a number of traders are preparing to take off ahead of the Republican convention in New York next week.
"The fact that oil prices are falling off a bit is certainly helpful," said Dave Legeay, director of portfolio management at McDonald Financial Group. "(But) fear that terrorism will disrupt supply is hanging over the market as a whole. Terrorism is also in play as we move forward to the election season."
Investors were pleased with the latest report from the Commerce Department (search), which said orders for costly manufactured goods rose by 1.7 percent in July, an encouraging sign that the economy is shaking off summer doldrums. The best reading in four months for durable goods — big-ticket items expected to last at least three years — was boosted by demand for airplanes, machinery and communications equipment.
"The durable orders show that there is still some bounce in the economic recovery. By beating expectations in aircraft orders, it really caught a lot of traders by surprise," said Phil Flynn, vice president and senior market analyst with Alaron Trading Corp. "Though the core was not as strong as hoped for, overall it should be an optimistic number today."
But the department found sales of new homes declined by 6.4 percent in July, a far steeper drop than analysts anticipated. The decline left home sales at their lowest level since December. Figures for June were also revised lower. Analysts said the challenging labor market and rising energy prices may be making some people wary about purchasing a new home.
Toll Brothers Inc. (TOL) shed 34 cents to $43.12, despite reporting a 56 percent surge in profits and raising its forecast for the year based on current demand and its backlog of orders for new luxury homes. Enthusiasm for the homebuilder, which surged in early trading, waned on the news about sliding home sales.
Williams-Sonoma Inc. (WSM) rose 10 percent, up $3.14, to $34.64, after reporting a 55 percent jump in second-quarter profits on strong sales at Pottery Barn and its outlet stores. The home product retailer also raised its revenue estimates and reiterated its income guidance while elevating earnings, revenue and sales forecasts for the year.
Chipmaker Intel Corp. (INTC) rose 28 cents to $21.95, a 1.29 percent rise, Advanced Micro Devices Inc. (AMD) rose cents to $12.20, a 2.09 percent increase, while Applied Materials Inc. (AMAT) the world's largest maker of chip-making gear, gained 33 cents to $16.26.
Gap Inc. (GPS) fell 40 cents to $19.52 after brokerage firm Merrill Lynch downgraded the retailer to "neutral" from "buy" on concerns about sluggish sales, which could continue to decline this fall amid pressure on consumer spending, a mediocre product line and the company's decision to focus on young adults instead of back-to-school fashions. The firm's analyst also lowered earnings-per-share estimates for the rest of this year and next.
H&R Block Inc. (HRB), the largest U.S. tax preparation firm, was another burden after the company posted a first-quarter loss after the bell on Tuesday. Shares tumbled $2.78, or 5.43 percent, to $48.45.
Trading was light, with 1.19 billion shares changing hands on the New York Stock Exchange, below the 1.4 billion daily average for last year. About 1.3 billion shares were traded on Nasdaq, below the 1.69 billion daily average last year.
Advancers outnumbered decliners on the NYSE and Nasdaq by about 2-to-1.
The Russell 2000 index, which tracks smaller company stocks, closed up 5.13, or 0.9 percent, at 550.14.
Overseas, Japan's Nikkei stock average finished 1.3 percent higher Wednesday. In Europe, France's CAC-40 added 0.02 percent, Britain's FTSE 100 was up 0.1 percent and Germany's DAX index gained 0.5 percent.
Reuters and the Associated Press contributed to this report.