NEW YORK – Stocks rose on Thursday as investors bought technology shares on expectations for a jump in capital spending at year-end, while a drop in gasoline prices eased worry about high fuel costs hitting household budgets.
The Dow Jones industrial average (search) climbed 79.69 points, or 0.76 percent, to end at 10,552.78, while the Standard & Poor's 500 Index (search) advanced 10.79 points, or 0.89 percent, to finish at 1,227.68. The Nasdaq Composite Index (search) rose 25.82 points, or 1.22 percent, to close at 2,141.22.
EBay Inc. (EBAY) rose 6 percent, helping Nasdaq to its largest 1-day percentage gain in 10 weeks. Ebay shares rose after brokerage CSFB said the Web auctioneer's quarterly earnings are likely to top Wall Street estimates. The stock was up $2.37 at $41.30.
Among advancing stocks in the Dow, American International Group Inc. (AIG) rose 2 percent to $62.26 after its chief executive said on Wednesday that some insurance rates have risen following the huge insured losses expected to come out of Hurricane Katrina.
"One of the contributing factors for the gains is the fact that gasoline futures came off the highs of the day," said Paul Cherney, president of paulcherney.com, a stock market analysis firm. "Any sign that the wallet won't be hit so deeply by energy prices is a cause to push stocks higher."
Some of the day's advances should be attributed to portfolio managers buying stocks ahead of the end of the third quarter, he added.
U.S. crude for November delivery rose 44 cents to settle at $66.79 a barrel, but NYMEX October gasoline fell 8.77 cents to $2.2516 a gallon, after climbing to a session high of $2.37.
In recent days, stocks have closely tracked movements in crude oil futures as concerns mount about the impact of high fuel costs on the economy following the recent hurricanes.
Others said recent government data on the economy has been encouraging, which may leave corporations with money to spend on technology in the fourth quarter, even if consumers are pinched by fuel costs.
"The market's gains really are a response to the good fundamentals we've seen, like the jobless claims," Michael Metz, chief investment strategist at Oppenheimer & Co., said. "It's really helping tech because that is one of the most cyclical parts of the economy. There is also hope that capital spending will be vigorous even if the consumer takes a break."
First-time claims for U.S. state unemployment insurance benefits plunged more than expected in the week ended September 24, falling 79,000 last week to 356,000 as hurricane-related applications declined, the Labor Department said.
Trading was active, with 1.63 billion shares changing hands on the New York Stock Exchange, above the 1.46 billion daily average for last year. About 1.84 billion shares were traded on Nasdaq, about equal to the 1.81 billion daily average last year.
The number of rising shares outnumbered those on the decline by a ratio of more than 2 to 1 on the NYSE. On Nasdaq, advancers led decliners by about 2 to 1.
PepsiCo Inc. (PEP) rose 2.6 percent, or $1.44, to $56.50 on the New York Stock Exchange after the soft drink maker reported a quarterly profit that topped Wall Street expectations.
E*Trade Financial Corp.(ET) gained 5.5 percent, or 89 cents, to $17.22 on the NYSE after the online brokerage said it would buy BrownCo from J.P. Morgan Chase & Co. (JPM) for $1.6 billion.
Red Hat Inc. (RHAT) jumped almost 30 percent, or $4.93, to $21.44 on the Nasdaq. Red Hat, the largest distributor of Linux computer software, on Wednesday reported quarterly profit and revenue that topped Wall Street estimates. .
Fannie Mae (FNM) shares rose 7.6 percent, or $3.18, to $44.89 on the NYSE, as some investors determined that the stock's sell-off on Wednesday in response to a Dow Jones report of new accounting irregularities was an overreaction. On Wednesday, Fannie Mae's market capitalization dropped nearly $5 billion as the mortgage finance enterprise's stock plummeted almost 11 percent to close at $41.71 on the NYSE.
Among decliners, Cypress Bioscience Inc. (CYPB) shares plunged 56.5 percent, or $7.17, to $5.53 on Nasdaq after Cypress and Forest Laboratories Inc. (FRX) said on Wednesday their experimental treatment for fibromyalgia failed to meet the primary goal in an important late-stage trial. Forest shares fell 9 percent to $38.50 on the NYSE.
The latest revision of government figures for second-quarter U.S. gross domestic product showed the economy expanded at an annual rate of 3.3 percent, in line with economists' forecasts in a Reuters survey.