Oil inventory report
pumps up stocks

NEW YORK » A late surge in buying sent stocks sharply higher yesterday as an upbeat government oil inventory report helped investors look past rising oil prices and mediocre economic data.

There were reasons for optimism in the Energy Department's weekly inventory report, which showed strong reserves in gasoline, heating oil and other distillates. The report served to slow, but not stop, the big jump in oil prices seen this week. A barrel of light crude closed at $51.39, up 22 cents, on the New York Mercantile Exchange.

Combined with the rather unimpressive economic data showing a slight rise in unemployment and a dropoff in orders for big-ticket items, the fact that the markets did not slide further earlier in the session boosted investors' confidence.

"I think you're seeing a lot of institutional money that was put to work this afternoon," said Chris Johnson, manager of quantitative analysis at Schaeffer's Investment Research in Cincinnati. "Stocks traded pretty narrowly most of the day but didn't give ground, and we're seeing a bounce off that."

The Dow Jones industrial average rose 75, or 0.7 percent, to 10,748.79.

Broader stock indicators also gained ground. The Standard & Poor's 500 index was up 9.40, or 0.79 percent, at 1,200.20, and the Nasdaq composite index gained 20.45, or 1.01 percent, to 2,051.70.

Wall Street was unimpressed with the government's latest economic data, which contributed to the market's early uncertainty. The Commerce Department said orders for durable goods -- items built to last at least three years -- fell 0.9 percent in January, the worst showing in three months. And the Labor Department reported a larger-than-expected increase in first-time unemployment claims.

The middling economic figures failed to lift the dollar, which fell against the euro and was mixed against other currencies. Gold rose modestly, while bonds slipped following the oil inventory report, with the yield on the 10-year Treasury bond rising to 4.29 percent.

With those factors in mind, the market's late move higher may not be a sign of a strong rally, analysts said, especially with the dollar still low and oil prices above $50 per barrel -- both of which have spurred fears of inflation on Wall Street.

A sharp drop in Internet search engines pressured tech stocks. Time Warner Inc. announced its America Online unit would launch its own search engine for local information, which investors saw as a new phase in the battle for Internet search customers.