U.S. stocks advanced as lower oil prices and President Bush's pledge to rebuild the Gulf Coast after Hurricane Katrina brightened the outlook for the economy and corporate profits.
"Corporate earnings are going to do well, and we think they could do even better now because of Katrina," said Neil Donahoe, chief investment officer of SYM Financial Advisors, which manages $500 million in Warsaw, Ind. "There are positives from an economic point of view. Some companies out there are going to benefit."
And as investors sought a hedge against inflation, gold jumped in New York and London, reaching a 17-year high for the second straight day. Also, the central bank of Argentina said Wednesday that it may boost gold reserves to protect against inflation and financial crises.
"When the prospect of significant global inflation rears its ugly head, the value of all currencies will deteriorate and gold will do very well," said Geoff Stanley, a precious-metals analyst at BMO Nesbitt Burns in New York.
The Dow Jones industrial average rose 83.19, or 0.8 percent, to 10,641.94.
Broader indicators also rose. The Standard & Poor's 500-stock index was up 10.18, or 0.8 percent, at 1237.91, and the Nasdaq composite index rose 14.20, or 0.7 percent, to 2160.35.
Trading was the busiest in three years with the expiration of futures and options on indexes and individual stocks. The S&P 500 also completed its shift today to a new calculation in which companies are weighted by shares available for trading, not stock-market value.
Even after today's gains, benchmarks had their first weekly losses in three. For the week, the S&P 500 and Dow each retreated 0.3 percent, while the Nasdaq dropped 0.7 percent.
Louisiana-Pacific rose 92 cents to $27.04. Analysts expect it will benefit from post-Katrina rebuilding.
Adobe Systems jumped $2.53, or 9.4 percent, for the best performance in the S&P 500, after profit beat expectations.
Halliburton rose 68 cents, to $65. The shares have climbed 14 percent since Katrina hit Aug. 29.
Saks, whose payments to vendors are under investigation by regulators, fell $2.03, to $18.60, the biggest drop in four years.
New York Stock Exchange composite index rose 63.15, to 7646.29.
American Stock Exchange index rose 11.19, to 1721.32.
Russell 2000 index of smaller-company stocks rose 6.56, to 671.98.
NYSE: 3.14 billion shares, up from 2.07 billion on Thursday. Advancers narrowly outnumbered decliners 3 to 2.
Nasdaq: 2.33 billion shares, up from 1.73 billion. Advancers narrowly outnumbered decliners 5 to 3.
Crude oil for October delivery: $63.00, down $1.75.
Gold for current delivery: $459.50 a troy ounce, up from $455.50 on Thursday.