Stocks Jump As Dollar Rises and Oil Price Falls

NEW YORK, May 1 -- Wall Street shot higher Thursday as investors viewed the rising dollar and falling oil prices as promising signs for the economy. The Dow Jones industrial average soared nearly 190 points to close above 13,000 for the first time since January.

The dollar jumped on better-than-expected economic data and the Federal Reserve's apparent resolve to monitor inflation. The Commerce Department said consumer spending increased 0.4 percent in March from the previous year, more than predicted, and the Institute for Supply Management said U.S. manufacturing contracted in April by a bit less than anticipated.

The readings were not all positive; consumer spending rose mainly because of rising energy and food prices. The ISM's report also indicated that companies are hurting from climbing costs.

But the dollar, which has recently strengthened after a protracted decline, rallied anyway, pushing the euro down more than 1 percent, to $1.5461. Trading was thin, with major currency markets closed for the May Day holiday, but the dollar's advance helped crude oil fall to $112.52 a barrel. That alleviated some of the inflation concerns in the market, given that crude recently traded near $120.

The Dow rose 189.87, or 1.48 percent, to 13,010.00. It hadn't closed above 13,000 since Jan. 3, when it ended at 13,056.72. The Dow is still down 8.15 percent from its record close of 14,164.53, reached Oct. 9, before the brunt of the credit crisis hit Wall Street.

Broader stock indicators also enjoyed a significant advance. The Standard & Poor's 500-stock index rose 23.75, or 1.71 percent, to 1409.34 -- its first close above 1400 since Jan. 14. The Nasdaq composite index climbed 67.91, or 2.81 percent, to 2480.71.

Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.77 percent from 3.73 late Wednesday.

As the dollar moved higher against other currencies, prices for gold and other commodities dropped.

The dollar's rise came a day after the Fed lowered a key interest rate by a quarter-point but indicated that the economy should keep growing moderately, with inflation becoming a growing concern. The economic assessment accompanying the Fed's rate decision was unclear about its policy going forward, but it is widely believed that the central bank will pause after a string of cuts that lowered rates by three percentage points since last summer.

Investors are predicting another gloomy reading on U.S. employment Friday. They expect the Labor Department's report to show a 75,000 net loss in jobs for April -- which would be the fourth straight month of losses -- and a rise in unemployment to 5.2 percent from 5.1 in March. In a negative sign ahead of that data, the government said Thursday that the number of workers filing claims for unemployment benefits increased last week by a greater-than-expected 35,000.

However, with the government sending stimulus checks to taxpayers and the effects of the Fed's rate cuts still working their way through the financial system, many investors are focused on the second half of the year, when they are betting the economy will rebound.

Movers

Home Depot gained $1.07, to $29.87. The company said it will close 15 stores nationwide, affecting 1,300 employees.

Marathon Oil rose $2.34, to $47.91. Despite weak results at its refining business, the oil and gas company's profit rose 2 percent on high oil prices.

Eastman Kodak lost 67 cents, to $17.22. The photography products company posted a smaller quarterly loss, but higher costs causes earnings to come in worse than analysts expected.