Drop in oil prices
pushes up stocks

NEW YORK » Stocks tottered higher yesterday as a slide in oil prices and upbeat earnings news eclipsed an unexpectedly steep drop in durable goods orders that raised questions about the strength of the economy.

Analysts were pleased by the advance, noting that the market had been oversold in the previous session amid anxiety over corporate results and the broader economic picture. But some observers felt the uptick lacked conviction, and predicted a continuation of the volatility that has dogged stocks so far during this earnings season.

"Earnings season is always volatile," said Michael Murphy, head trader at Wachovia Securities in Baltimore, noting that historically April has been the worst month of the year for stocks. "The bias seems to be to the upside today, and if we continue to get good news the market can move higher. But I still think it's likely to remain volatile through the end of the week."

The Dow Jones industrial average closed up 47.67, or 0.47 percent, at 10,198.80, after dropping 91 points on Tuesday. The broader gauges also rebounded. The Standard & Poor's 500 index added 4.64, or 0.40 percent, to 1,156.38. The Nasdaq composite index gained 2.99, or 0.16 percent, to 1,930.43.

Treasurys were up, with the yield on the 10-year note sliding to 4.23 percent, down from 4.27 percent late Tuesday. The dollar was mixed against other major currencies; gold prices fell.

Oil plummeted $2.59 to $51.61 on the New York Mercantile Exchange following the government's weekly inventory report, which showed a 5.5 million-barrel increase in crude supplies, but a 300,000-barrel draw on gasoline; analysts had been hoping for a build. The energy stocks in the S&P 500 collectively shed 2.58 percent on the news, according to the ETF that tracks the sector; Exxon Mobil Corp. dropped 1.5 percent, or 89 cents, to $58.38, making it Dow's worst performing stock for the day.

The falling price of oil cheered investors, who had been deeply worried by the Commerce Department's report that orders to U.S. factories for durable goods -- big-ticket items that last three years or more -- had plunged 2.8 percent in March.

Analysts were less alarmed by the data, however, saying it reduced the likelihood that the Federal Reserve would take a more aggressive approach to raising short-term interest rates when the policy makers meet next week.

Fears of a more aggressive Fed were raised Tuesday by a report that showed a surprise jump in new home sales for March.