The Dow Jones industrial average (search) ended up 83.19 points, or 0.79 percent, at 10,641.94. The Standard & Poor's 500 Index (search) closed 10.18 points higher, or 0.83 percent, at 1,237.91. The technology-laced Nasdaq Composite Index (search) rose 14.20 points, or 0.66 percent, to 2,160.35.
For the week, all three indexes ended lower with the Dow down 0.34 percent, the S&P down 0.3 percent and the Nasdaq down 0.7 percent.
Deutsche Bank raised its rating on Exxon Mobil (XOM) to "buy" from "hold," saying oil supplies are likely to remain tight over the coming year. Exxon Mobil shares climbed 2 percent to $63.70.
"Energy has been pretty darn strong even with the price of crude down," said Jon Brorson, managing director of growth equities at Neuberger Berman in Chicago. "In fact, the only real negative sector is consumer discretionary, because of the horrendous consumer sentiment numbers."
Volume was heavy as options expired, but advances were limited as investors eyed America's current account deficit for April-June. The deficit dipped slightly but still was at the second-highest level in history, on track to surpass last year's record current account deficit of $668.1 billion. While the United States so far has not had any trouble attracting the foreign money needed to finance this deficit, economists worry that at some point foreign investors will no longer want to hold such sizable sums of dollar-denominated assets.
Gains were also capped by the University of Michigan's (search) midmonth report on consumer sentiment for September. Reports said the survey, which is only available to subscribers but was reported by Dow Jones, showed a steep decrease, but analysts wrestled with whether consumers would really change their spending habits, or whether they were just depressed and stunned by Hurricane Katrina (search).
Retail stocks traded lower following the sharp decline. The world's No. 1 retailer Wal-Mart Stores (WMT) fell 1 percent to $43.87, while blue-chip home improvement chain Home Depot Inc. (HD)slipped 1.1 percent to $39.90.
Crude oil futures dropped $1.70 to $63.05 per barrel and helped fuel the broader market. Oil fell after the government said Hurricane Katrina did not cause major damage to underwater pipelines in the Gulf of Mexico.
Credit Suisse First Boston upgraded Intel (INTC) to "neutral" from "underperform." The company's shares rose 1.1 percent to $24.81.
Progressive Corp. (PGR) rose $4.17 to $102.02 after the country's third-largest auto insurer said monthly earnings dropped 43 percent in August. Through Sept. 14, the insurer had 19,000 claims from Hurricane Katrina. The company set aside $119.5 million in reserves for the claims. But the $1.09 billion in premiums it wrote was flat for the year-ago period and Bear Stearns initiated coverage at "peer perform."
American Express Co. (AXP) rose $1.90 to $59.46 after a court approved its $350 million in financing to Delta Air Lines Inc. (DAL) as the carrier moves through bankruptcy proceedings, according to Dow Jones. Terms of the restructuring deal call for Delta to repay the $500 million that American Express Travel Related Services Co. advanced in the fourth quarter of 2004 and first quarter of 2005 as prepayment for the purchase of Delta SkyMiles reward points. Delta rose 10 cents to 85 cents a share.
DaimlerChrysler AG (DCX) rose $1.51 to $51.68 after said it agreed to buy out minority shareholders in a German diesel-engine maker it owns, opening the way for DaimlerChrysler to sell the business. DaimlerChrysler, which is selling off almost everything outside its core vehicle business, said it was in talks with several potential buyers.
Trading was heavy on the New York Stock Exchange, with about 2.55 billion shares changing hands, far above last year's daily average of 1.46 billion, while on Nasdaq, about 2.26 billion shares traded, beating last year's daily average of 1.81 billion.
Advancing stocks outnumbered declining ones by a ratio of 3 to 2 on both the NYSE and by 5 to 3 on the Nasdaq.
The Russell 2000 index of smaller companies rose 6.56, or 0.99 percent, to 671.98.
Overseas, Japan's Nikkei stock average fell 0.22 percent. Britain's FTSE 100 rose 0.45 percent, Germany's DAX index rose 1.64 percent, and France's CAC-40 rose 0.67 percent.
Reuters and the Associated Press contributed to this report.