Estimates for damage caused by Hurricane Katrina approach $100 billion. As many as 1 million people lost their jobs. Many Wall Street economists believe the hurricane will slice as much as 1 percent off economic growth this year, and some fear the economic blow will be much worse.

So why has the stock market risen almost every day since Katrina hit, including a 141.87-point, or 1.4 percent, rally in the Dow Jones industrial average on Tuesday?

Traders and money managers offered a few possible explanations, foremost among them a widespread belief that the Federal Reserve, seeking to head off a hurricane-induced downturn, may pause its campaign of interest rate increases when it meets later this month.

Lower rates help propel stocks because they make it cheaper for companies to borrow money and expand. They also make stocks attractive compared with lower-yielding investments such as bonds.

Traders also attributed the financial market resilience to a sharp drop in oil prices over the past few days, a strong report on the economy's service sector and a belief that spending on rebuilding in the Gulf Coast region will drive up earnings for many companies such as retailer Home Depot and energy service firm Halliburton.

"There are upsides and downsides to the hurricane," one trader outside the New York Stock Exchange said Tuesday morning, using the coolly detached language of the marketplace. "Right now, what's really driving the rally on the floor is the feeling that the Fed won't raise rates again right away."

The trader spoke on condition of anonymity because he was not authorized to speak publicly. But his comments were echoed by several Wall Street strategists. "You've got some pretty learned people right now predicting a Fed pause," said Phil Dow, chief equity strategist at RBC Dain Rauscher.

Dow said the biggest driver of Tuesday's rally was the drop in oil prices, which followed announcements that industrialized nations would release 60 million barrels of crude from their reserves and signs that production and refining capacity in the Gulf were returning. Gasoline futures sank 12.87 cents, to $2.055 a gallon.

Lower oil prices, combined with the surprisingly strong report on growth in the service sector, helped spark big gains for retailers. Nordstrom gained $1.90, or 5.7 percent, to finish at $35. Retailers suffered last week on fear that high gas prices would cut into consumer spending.

Other indicators also gained. The Standard & Poor's 500-stock index rose 15.37, or 1.26 percent, to 1233.39. The Nasdaq composite index added 25.79, or 1.2 percent, to 2166.86.

Bonds, which rallied last week on fear of an economic downturn, dropped on Tuesday. The yield on the 10-year Treasury bond, which moves in the opposite direction of price, rose to 4.09 percent, up from 4.03 percent. The dollar rose against the yen and the euro.

At the Chicago Board of Trade, home to commodity and bond futures trading, some traders described increased uncertainty caused by Katrina while others said they saw little effect. "There's a lot of uncertainty in the grain room," said Jason Pope, a trader in wheat options. "A vast percentage of our exports go through New Orleans, and it's been closed. It's uncertain when it will open."

For the agriculture market, Katrina "hasn't done much," said trader Peter Neagle. "Initially they said it would be bad, since all the grains come out of the gulf, but it really hasn't been affected."

Lydersen reported from Chicago.

Indexes

New York Stock Exchange composite index fell 12.17, to 7518.96.

American Stock Exchange index rose 6.17, to 1686.21.

Russell 2000 index of smaller-company stocks rose 11.15, to 674.48.

Volume

NYSE: 1.93 billion shares, up from 1.64 billion on Friday. Advancers outnumbered decliners 8 to 3.

Nasdaq: 1.43 billion shares, up from 1.15 billion. Advancers outnumbered decliners 2 to 1.

Commodities

Crude oil for October delivery: $65.96, down $1.61.

Gold for current delivery: $444.40 a troy ounce, up from $444.20 on Friday.

Charles Manos, left, and Joseph Farina work on the floor at the New York Stock Exchange. Traders were counting on the Fed to stop raising interest rates.