Investors cheered by falling oil prices and an improving job picture sent stocks higher Tuesday, hoping the news signals a renewal of economic strength and a fall rally in stocks.
Oil prices dropped below $43 per barrel before rising slightly to end the session, giving credence to investors' belief that the summer's run on oil prices was at an end.
Wall Street also moved higher on Friday's jobs report, which was overlooked in last week's very light trading and overshadowed by Intel's disappointing mid-quarter report. The Labor Department reported a 0.1 percentage point drop in the unemployment rate and the creation of 144,000 new jobs.
The Dow Jones industrial average rose 82.59, or 0.8 percent, to 10,342.79, its highest close since June 30. The Standard & Poor's 500-stock index climbed 7.67, or 0.7 percent, to 1121.30, and the Nasdaq composite index gained 14.08, or 0.8 percent, to 1858.56.
While volume on the major markets rose substantially after last week's record lows, many investors remained on the sidelines, awaiting Federal Reserve Chairman Alan Greenspan's testimony before Congress on Wednesday, where he was expected to give his view on the strength of the economic recovery.
"I think Greenspan will stick to his mantra of a measured pace of interest rate hikes," said John Lynch, chief market analyst at Evergreen Investments. "We're transitioning from the spectacular growth of the past year to more boring, but still important, growth, and the interest rate policy has to reflect that."
Most industry sectors enjoyed gains Tuesday, with mining and construction stocks leading the market. Shares of oil producers and oil equipment makers fell as crude oil futures dropped, while semiconductors suffered more losses in the wake of Intel's mid-quarter announcement.
Pressure on semiconductors grew more intense as Lehman Brothers cut its ratings on Intel and National Semiconductor, citing low demand for computer chips. Intel dropped 16 cents, to $19.89, while National Semiconductor slipped 75 cents, to $12.42.
After disappointing sales over the past three months, Wal-Mart Stores reported that its same-store sales -- comparing stores that have been open for at least a year -- were expected to rise 2 to 4 percent in September, bolstered by last-minute back-to-school spending. Wal-Mart shares rose 4 cents, to $53.29.
Circuit City Stores rose 6 cents, to $13.70, after announcing that its sales were up 2.9 percent in the second quarter. The electronics retailer is scheduled to announce its full second-quarter results on Sept. 17.
Embattled airline US Airways Group fell 30 cents, to $2.05, after its pilots union on Monday rejected the company's latest contract proposal.
* The New York Stock Exchange composite index rose 45.20, to 6555.64; the American Stock Exchange index fell 3.02, to 1240.15; and the Russell 2000 index of smaller-company stocks rose 6.69, to 562.93.
* Advancing issues outnumbered declining ones by 8 to 3 on the NYSE, where trading volume rose to 1.21 billion shares, from 922 million on Friday. On the Nasdaq Stock Market, advancers outnumbered decliners by 12 to 1 and volume totaled 1.3 billion, up from 1.23 billion.
* The price of the Treasury's 10-year note rose $3.75 per $1,000 invested, and its yield fell to 4.24 percent, from 4.29 percent on Friday.
* The dollar fell against the Japanese yen and the euro. In late New York trading, a dollar bought 109.39 yen, down from 110.60 late Friday, and a euro bought $1.2098, up from $1.2071.
* Light, sweet crude oil for October delivery settled at $43.31, down 68 cents, on the New York Mercantile Exchange.
* Gold for current delivery fell to $397.40 a troy ounce, from $400.50 on Friday, on the New York Mercantile Exchange's Commodity Exchange.