Investors shrugged off weak retail sales and stagnant employment numbers today and sent stock prices soaring, seizing on the belief that war in Iraq will be put off until at least next week.
The market rally began in Europe, where all the major market indexes closed up 6 percent or more after having suffered big losses Wednesday. The buying quickly spread to the United States, and by the time trading closed the Dow Jones industrial average was up 269.68 points, or 3.6 percent, to 7821.75. It was the biggest one-day gain of the year and the largest since mid-October.
The price of crude oil and gold fell, while stocks rose across the board. The broad Standard & Poor's 500-stock index rose 27.71 points, or 3.4 percent, to 831.90, while the technology-heavy Nasdaq composite index rose 61.53, or 4.8 percent, to 1340.77.
But without any encouraging economic news, Wall Street traders and money managers attributed the unexpected bounce to relief among investors who have been holding their breath, waiting either for a war to begin or for diplomacy to prevail.
"Everyone is still trading on the Blix, Bush, Blair, Saddam news as opposed to any economic factors," said James W. Paulsen, chief investment officer at Wells Capital Management. He was referring to the chief U.N. arms inspector and the leaders of the United States, Britain and Iraq. "The retail and unemployment numbers were ignored."
The U.N. Security Council continued its debate over Iraq today, but the Bush administration signaled it would probably not push for a final vote on military action until at least early next week. Such a vote had been expected Friday.
Technology shares were the strongest performers today, with every member of the Nasdaq 100 higher, led by Microsoft, Qualcomm, Intel, Cisco Systems and Oracle.
Money managers said the tech rally was driven by the belief that shares of companies in the sector have fallen too far, too fast. "Even though the economic news is weak, the U.S. economy is really still chugging along and a lot of stocks have been pummeled to the point that for some its seemed like an opportunity to leap back into the market," said Michelle Clayman of money-management firm New Amsterdam Partners.
Economic indicators offered no explanation for the rally. The government reported that retail sales fell 1.6 percent in February as snowstorms and anxiety over the state of the economy and possible war with Iraq kept consumers away from shopping malls.
New claims for unemployment benefits fell 15,000 last week, to 420,000, a level suggestive of a weak labor market.
* The New York Stock Exchange composite index rose 138.51, to 4625.21; the American Stock Exchange index rose 6.78, to 818.51; and the Russell 2000 index of smaller-company stocks rose 9.50, to 355.44.
* Advancing issues outnumbered declining ones by 8 to 3 on the NYSE, where trading volume rose to 1.74 billion shares, from 1.55 billion on Wednesday. On the Nasdaq Stock Market, advancers outnumbered decliners by 5 to 2 and volume totaled 1.77 billion, up from 1.49 billion.
* The price of the Treasury's 10-year note fell $13.75, and its yield rose to 3.75 percent, from 3.59 on Wednesday.
* The dollar rose against the Japanese yen and the euro. In late New York trading, a dollar bought 118.57 yen, up from 117.32 late Wednesday, and a euro bought $1.0813, down from $1.0998.
* Crude oil prices continued to sink as war with Iraq seemed further off. Light, sweet crude for April delivery settled at $36.01, down $1.82, on the New York Mercantile Exchange; it had been as high as $40 in recent days. Iraq pumps about 3 percent of the world's oil.
* Gold, which tends to rise along with war fears, fell to its lowest price in three months, closing at $335.90 a troy ounce on the New York Mercantile Exchange's Commodity Exchange, down from $346.50.