PeopleSoft deal
cheers investors

NEW YORK » Investors pushed stocks substantially higher yesterday as Wall Street greeted the Oracle-PeopleSoft merger and a climb in retail sales as signs of continued economic improvement. The Standard & Poor's 500 index set a new post-9/11 high.

Oracle Corp. announced that PeopleSoft Inc. would accept a $26.50-per-share bid, valuing the rival software company at $10.3 billion. The agreement ends an 18-month feud between the two that featured courtroom intrigue and pithy public statements, and cheered investors who feared the battle would distract the companies from their core businesses.

Wall Street also applauded the U.S. Commerce Department's report on November retail sales, which rose 0.1 percent, better than the flat sales economists had expected. Taking auto sales out of the equation, retail sales rose 0.5 percent for the month. Wall Street had expected a 0.3 percent rise excluding autos.

"I think the retail sales numbers helped, alleviating a lot of the concern over holiday sales prospects. And then on top of that you have all this merger activity," said Bryan Piskorowski, market strategist for Wachovia Securities. "Mid-month is typically pretty quiet, but this news is bringing some people back into the market."

The Dow Jones industrial average rose 95.10, or 0.9 percent, to 10,638.32, finishing near its high for the session. It was the Dow's best closing level since March 1.

Broader stock indicators were strongly higher. The S&P 500 index was up 10.68, or 0.9 percent, at 1,198.68. It was the best close for the S&P since Aug. 8, 2001.

The Nasdaq composite index gained 20.43, or 0.96 percent, to 2,148.50, near its 2004 high.

Investors also received good news from the Commerce Department's latest business inventory report. The 0.2 percent rise in inventories for November was less than expected, meaning that demand for goods could be picking up.

A small rise in oil futures did little to rattle investors, who remain pleased that prices remain near their five-month lows. A barrel of light crude was quoted at $41.01, up 30 cents, on the New York Mercantile Exchange.

Between oil prices and the retail sales figures, investors were becoming more enthusiastic about the economy, analysts said, and were hopeful that the Federal Reserve, meeting today, would confirm that view in its policy statement.

"I think the economy is doing pretty well, better than a lot of people expected," said Bill Groenveld, head trader for vFinance Investments.