Crude skydives,
driving up stocks

U.S. stocks rose as crude-oil prices plummeted more than $3 a barrel, bolstering optimism that the economy can sustain its expansion.

The Standard & Poor's 500 Index closed at its highest since Aug. 7, 2001.

Retailers such as Wal-Mart Stores Inc. gained after the government reported that consumer spending accelerated in October.

Equipment makers such as Honeywell International Inc. advanced after a survey showed U.S. factories received more orders last month.

"Crude is a positive for the market," said Frank Gannon, who oversees $1.4 billion at AIG SunAmerica Asset Management in Jersey City, N.J. "The economic statistics continue to be pretty positive, and it's the beginning of a new month. People have the expectation that December will be a good month for stocks."

The S&P 500 added 17.55, or 1.5 percent, to 1,191.37, as 22 of its 24 industry groups rose. The Dow Jones Industrial Average gained 162.20, or 1.6 percent, to 10,590.22. Advances in semiconductor shares including Intel Corp. lifted the Nasdaq Composite Index to its highest since Jan. 26. The benchmark climbed 41.42, or 2 percent, to 2138.23.

History suggests the rally has further to go. Over the last decade, the S&P 500 averaged a 1.4 percent rise in December and has fallen only twice in the month -- in 2002 and 1996. The benchmark finished November with its best monthly gain of the year, up 3.9 percent.

More than three stocks advanced for every one that dropped on the New York Stock Exchange. Almost 1.8 billion shares changed hands on the Big Board -- 25 percent more than the three-month daily average.

Oil prices had their biggest drop in three years after the government said U.S. heating oil inventories increased last week. Crude for January delivery tumbled 7.4 percent to $45.49 in New York. Prices have slumped 18 percent from a record $55.67 on Oct. 25. The S&P 500 has climbed 8.8 percent in that period.

Consumer spending rose 0.7 percent in October following a 0.6 percent gain in September, the U.S. Commerce Department said.

The figures, along with lower oil prices, eased concerns that holiday sales will be lackluster. An S&P 500 index of retailers advanced 1.6 percent, rebounding from a 2.9 percent retreat in the first two days of the week.

Wal-Mart, the world's largest retailer, gained 76 cents to $52.82, ending a five-day decline. Home Depot Inc., the No. 1 home-improvement chain, climbed 53 cents to $42.28.