NEW YORK (Reuters) - U.S. stocks shot up on Thursday after robust demand from overseas investors for U.S. government debt signaled confidence in the economy, while sliding crude prices soothed fears of high energy costs.
The rally was broad-based, with all but two of the 30 stocks in the Dow ending higher. Aircraft maker Boeing Co. <BA.N> gave the average its biggest lift.
Shares rebounded from earlier declines after the 10-year U.S. Treasury note <US10YT=RR> rose 16/32 in price at the government's quarterly debt auction, while its yield fell to 4.58 percent from 4.65 percent on Wednesday.
"It means the appetite for U.S. assets is still strong and that was enough to give stocks a boost this afternoon," said Michael Metz, chief investment strategist at Oppenheimer Holdings Inc. in New York.
The Dow Jones industrial average <.DJI> ended up 93.89 points, or 0.89 percent, at 10,640.10, the highest close in nearly two months. The Standard & Poor's 500 Index <.SPX> was up 10.31 points, or 0.84 percent, at 1,230.96. The Nasdaq Composite Index <.IXIC> was up 20.87 points, or 0.96 percent, at 2,196.68.
Industrial companies and retailers, sectors vulnerable to high energy costs, were among the Dow's biggest gainers after crude oil futures ended down $1.13 at $57.80 a barrel. Oil's decline to three-month lows is clearing the way for a traditional end-of-the-year rally, analysts said.
"There's been concern about how much higher oil prices will be felt by consumers, but people are now more optimistic that the year end will play out just fine," said Barbara Marcin, a money manager at Gamco Investors Inc.
Shares of Home Depot Inc. <HD.N>, the largest U.S. home improvement chain, also climbed 2.3 percent to $41.74. Shares of Boeing jumped 2.2 percent to $66.10.
Interest-rate-sensitive financial services stocks extended gains after the debt auction. Shares of blue-chip Citigroup Inc. <C.N>, the world's largest financial services provider, rose 1.9 percent to $47.73 on the New York Stock Exchange. Bank of America Corp.<BAC.N> shares gained 1.8 percent to $45.35.
"The financials bottomed out in mid-October. Now everybody and their sister is saying they've got to buy them," said Elliot Spar, market strategist with Ryan Beck & Co. in New York. "There's a perception that the yield on the 10-year note is not going that much higher."
Stocks fell before the auction, hurt by negative news from automaker General Motors Corp. <GM.N> and Cisco Systems Inc. <CSCO.O>, the supplier of Internet equipment.
GM shares fell 4.6 percent to $23.51 after earlier hitting a 23-year low amid increasing concerns that workers at Delphi Corp. <DPHIQ.PK> could go on strike. Delphi is GM's largest auto parts supplier.
Cisco forecast revenue growth below Wall Street expectations. Cisco shares shed 3.4 percent to $17.15.
Intel Corp. <INTC.O> rose 1.8 percent to $25.24, supporting both the Nasdaq and the Dow, after the world's largest chip maker announced a 25 percent increase in its quarterly dividend to 10 cents a share, starting in 2006, and authorized up to $25 billion in share repurchases.
After the closing bell, shares of Dell Inc. <DELL.O>, the world's biggest personal computer maker, slipped 1 percent to $28.92 on the Inet electronic brokerage system after it said quarterly profit fell amid costs to cut jobs and repair faulty parts in business computers.
"People are a little concerned about a growth stock that's increasing (revenues) at decreasing rate," said Derek Hong, a portfolio manager at Great Companies LLC, a money manager that recently sold its Dell shares.
Trading was heavy on the NYSE, with about 1.76 billion shares changing hands, above last year's daily average of 1.46 billion, while on Nasdaq, about 1.95 billion shares traded, more than last year's daily average of 1.81 billion.
Advancing stocks outnumbered decliners by 3 to 2 on both the NYSE and Nasdaq.
(Additional reporting by Vivianne Rodrigues)
