Stocks rallied strongly today as petroleum prices fell to a six-week low and investors saw profit opportunities in the massive Gulf Coast rebuilding pledged by President Bush.
Crude oil fell $1.75 a barrel to $63 and gasoline dropped more than 11 cents a gallon after several reports showed demand falling rapidly in response to high prices.
Wall Street picked Louisiana-Pacific Corp., the big lumber and plywood producer, as one of the obvious beneficiaries of the rebuilding project, which will pump $200 billion or more into the region hit by Hurricane Katrina.
While the reconstruction is expected to stimulate the economy, it also renews the threat of inflation, which pushed up interest rates in the bond market.
Hope that the hurricane might dissuade the Federal Reserve from continuing to raise rates is fading fast. Now Wall Street's view is that the fed will boost rates at its meeting next week and will continue to raise them through the end of the year.
The storm continues to take its toll, with consumer confidence plunging to a 13-year low in the latest University of Michigan survey.
Why Wall Street was so sanguine today about sagging confidence and rising rates was not clear, but today's strong gains still left the closely-watched indexes down for the week.
The Dow Jones industrial average climbed 83 points today to 10,641.94, off 37 points for the week.
The Nasdaq Stock Market composite index gained 14 to 2,160.35, off 15 points for the week, while the Standard & Poor's 500 stock index closed almost 10 points higher today at 1,237.91, but was off almost four points for the week.