This time, it was the consumer who had Wall Street rallying.
Better-than-expected earnings from big consumer brands Best Buy, ConAgra Foods Inc. and Dr Pepper Snapple Group Inc. sent the Dow Jones industrial average up 174 points Thursday to its highest level in six weeks. It has surged 21 percent since hitting a nearly 12-year low on March 9. And the technology-dominated Nasdaq composite index is now up 0.63 percent for 2009.
Strong demand for government debt at the Treasury Department's latest auction also lifted stocks by helping investors set aside recent nervousness about the government's ability to fund its economic stimulus and financial bailout programs.
Nearly every day over the past three weeks has seemed to bring morsels of good news — first from the stricken banking sector and then in the form of stronger-than-expected economic data. But Thursday, solid reports from companies selling to the consumer came as a relief to investors anxious about first-quarter earnings, which start pouring in next month.
The advance technically put the Dow in bull market territory; a bull market is defined as a 20 percent rise from a low point. But analysts are still hesitant to call the end of the bear market — there is a phenomenon known as a bear market rally that can quickly collapse in an uncertain economic environment.
Kevin Kramer, chief operating officer at West End Financial Advisors, an asset management company in New York, said unemployment, limited access to credit and heavy loads of debt are likely to keep curbing economic growth, and that may curtail stocks' advance.
"Just because things aren't getting worse doesn't mean they're getting better," Kramer said. "You stopped the flow of blood out of my body, but it doesn't mean I'm going to survive."
But with the end of the first quarter quickly approaching, money managers are fearful of missing out on the recent rally, the magnitude of which usually occurs over the course of many years.
David Waddell, senior investment strategist and chief executive of Waddell & Associates, said he has seen some "seller's remorse" among his clients who sold stocks too low in the first two months of the year. That can move people back into buying mode.
"One thing that many people are beginning to believe is that the market is going to bottom in 2009," Waddell said.
The Dow jumped 174.75, or 2.3 percent, at 7,924.56, its highest close since Feb. 12. It remains down 9.7 percent for the year, however, and down 44 percent from its record close of 14,164.53 in October 2007.
Broader stock indicators also gained. The Standard & Poor's 500 index rose 18.98, or 2.3 percent, to 832.86, and the Nasdaq rose 58.05, or 3.8 percent, to 1,587.00.
The Russell 2000 index of smaller companies rose 18.78, or 4.4 percent, to 445.30.
About four stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to 6.84 billion shares, down from Wednesday's 7.53 billion.
Bond prices jumped after Thursday's auction. The yield on the benchmark 10-year Treasury note, which moves opposite to its price, fell to 2.76 percent from 2.79 percent late Wednesday. The yield on the three-month T-bill slipped to 0.14 percent from 0.15 percent.
The dollar rose against other major currencies. Gold prices rose modestly.
Oil reached a new high for the year, settling up $1.58 at $54.34 a barrel on the New York Mercantile Exchange.
Best Buy, the world's largest consumer electronics retailer, said its fiscal fourth-quarter earnings fell 23 percent as it booked some one-time expenses. Stripping out those costs, results beat analysts' estimates as the world's largest consumer electronics retailer opened more stores, helping to boost sales. Best Buy rose $4.21, or 12.6 percent, to $37.67.
ConAgra, which owns the Healthy Choice and Peter Pan food brands, posted results that topped Wall Street's expectations as people go out to eat less and cook more meals at home. The company also stood by its earnings forecast for the year. ConAgra shares rose $1.43, or 9.2 percent, to $16.99.
Dr Pepper Snapple Group Inc. also came in ahead of Wall Street forecasts. The company, which sells drinks such as A&W, Squirt and Hawaiian Punch, $621 million in the fourth quarter as it wrote down assets and spent heavily on restructuring and severance. But its adjusted profit was better than analysts expected. The stock rose $2.36, or 15.2 percent, to $17.87.
Meanwhile, government data indicated that the economy is still in decline, but at a less devastating pace than feared.
The number of workers seeking unemployment benefits rose to a seasonally adjusted 652,000 from the previous week's revised figure of 644,000, the Labor Department said. But the gain was smaller than anticipated.
The Commerce Department said the nation's gross domestic product shrank at a 6.3 percent pace in the fourth quarter. That was a bigger drop than the government previously estimated, but not as severe as analysts predicted.
Overseas, Japan's Nikkei stock average rose 1.8 percent. Britain's FTSE 100 rose 0.6 percent, Germany's DAX index rose 0.9 percent, and France's CAC-40 fell less than 0.1 percent.
