NEW YORK – Stocks rose sharply Wednesday, extending Tuesday's rally, as investors expressed relief over plummeting oil prices following a government report that showed a build in crude inventories and lower-than-expected heating oil inventories.
The Dow Jones industrial average (search) ended up 113.55 points, or 1.15 percent, at 10,002.03. The Standard & Poor's 500 Index (search) added 14.31 points, or 1.29 percent, at 1,125.40. The technology-laced Nasdaq Composite Index (search) rose 41.20 points, or 2.14 percent, to 1,969.99.
The Dow closed above 10,000 for the first time since Oct. 13. The Nasdaq closed at its highest since Oct. 6 while the S&P had its highest close since Oct. 7.
A higher-than-expected rise in crude inventories last week sent December crude tumbling to settle $2.71 lower at $52.46 on the New York Mercantile Exchange (search) — just two days after hitting an all-time high of $55.67.
"As soon as we saw the inventory numbers come out this morning, oil prices dropped dramatically and stocks turned around. Importantly (stocks) gathered strength through the day — it wasn't just a knee-jerk reaction," said John Caldwell, chief investment strategist at McDonald Financial Group, part of Key Corp.
The U.S. Energy Information Administration (EIA) said on Wednesday that crude oil inventories rose by four million barrels last week to 283.4 million, while heating oil stocks fell by 600,000 barrels to 48.9 million.
Underscoring the volatility of fuel prices, oil futures initially rose following the government's weekly supply report, as investors focused on the slide in distillate products, which include heating oil. The subsequent decline in crude prices confused analysts, but helped equities rebound after a lackluster open.
December crude was down $1.82 at $53.30 a barrel on the New York Mercantile Exchange (search).
Wall Street has grown increasingly anxious about how soaring energy costs might dent consumer spending ahead of the what's widely expected to be a chillier than normal winter. OPEC urged the Bush administration Wednesday to release more oil from the U.S. strategic reserve to calm the market.
Analysts welcomed the two-day pop in share prices, saying it was partly the product of oversold conditions. Anxiety over lofty oil prices, rising interest rates, decelerating corporate earnings and fear that the upcoming presidential race could be targeted by terrorists, or might not result in a clear winner, have weighed heavily on the markets in recent weeks.
"It's nice to see some more volume coming back into the market, which indicates people are willing to make some commitments and look past some of the shorter-term issues we see, including in earnings and guidance," said Jack Caffrey, equity strategist for J.P. Morgan's private bank.
"Earnings have been OK this quarter, a little better than expected, but not quite as much better as we'd gotten used to. The (year-over-year) comparisons are getting tougher ... and you're seeing a larger percentage of companies missing expectations."
A jump in orders for big-ticket items offered some encouraging economic news. The Commerce Department (search) said orders to U.S. factories for durable goods — items expected to last three or more years — edged up 0.2 percent in September, propelled by higher demand for communications equipment. That followed a decline of 0.6 percent in August.
Excluding the volatile transportation sector, orders were up a stronger 1.7 percent last month following a 2.8 percent increase in August.
Boeing Co. (BA) was up 12 cents at $50.10 after the aerospace giant beat Wall Street expectations with a 78 percent jump in third-quarter earnings, buoyed by a strong defense business. It also raised its estimate for full-year profits, citing lower-than-anticipated tax expenses.
Chemicals maker DuPont Co. (DD) helped the Dow, rising $1.52, or 3.7 percent, to $42.92 after CSFB Wednesday raised its investment rating to "neutral" from "underperform."
Procter & Gamble Co. (PG) shed $1.43, or 2.69 percent, to $51.78 despite reporting a 14 percent rise in profits led by growth in developing markets and improved sales in its beauty care and fabric and home care divisions. The maker of Tide detergent and Pampers diapers beat per-share earnings estimates by a penny.
While the oil price drop sparked a broad-based rally, energy companies suffered. Dow component ExxonMobil Corp. (XOM) fell 44 cents to $48.95, while S&P 500 component ConocoPhillips (COP) was $1.01 lower, or 1.2 percent, at $84.92.
ATA Airline Holdings Corp. (ATAH), the parent company the nation's 10th-largest carrier, was up 27 cents, or 29 percent, at $1.20 after filing for bankruptcy protection and selling off airport slots and other assets to AirTran Airways Inc. for $87.6 million. AirTran was up 48 cents, or 4.7 percent, at $10.73.
Trading was heavy, with 1.7 billion shares changing hands on the New York Stock Exchange, above the 1.4 billion daily average for last year. About 2.1 billion shares were traded on Nasdaq, above the 1.69 billion daily average last year.
Advancers outnumbered decliners on the NYSE and the Nasdaq by about two to one.
The Russell 2000 index, which tracks smaller company stocks, was up 9.57, or 1.66 percent, at 587.18.
Overseas, Japan's Nikkei stock average added 0.18 percent. In Europe, France's CAC-40 surged 1.63 percent, Britain's FTSE 100 added 1.02 percent and Germany's DAX index rose 1.73 percent.
Reuters and the Associated Press contributed to this report.