NEW YORK (CNN/Money) -
Falling crude oil prices sparked a broad stock market rally Wednesday, sending the Dow back over 10,000 and the Nasdaq up more than 2 percent.
The Dow Jones industrial average (up 113.55 to 10,002.03, Charts) jumped 1.1 percent, according to early tallies, while the broader Standard & Poor's 500 (up 14.31 to 1,125.40, Charts) index rose 1.3 percent. The Nasdaq composite (up 41.20 to 1,969.99, Charts) rallied 2.1 percent.
"It's a very strong rally and it's right across the board, with tech stocks leading the way," said Peter Cardillo, director of research at S.W. Bach & Co. "Clearly, the fall in oil prices sparked this, but it's also a short-term shift in sentiment."
Oil prices tumbled nearly 5 percent following a report showing stronger than expected weekly inventory data.
That sparked a broad stock rally and a sell-off in Treasuries as investors bet lower oil prices would help boost economic growth in the coming months. That, in turn, sent bond yields higher.
Market breadth was positive. On the New York Stock Exchange, advancers beat decliners by more than two to one as almost 1.74 billion shares changed hands. On the Nasdaq, winners beat losers by the same margin on volume of 2.06 billion shares.
After the close Wednesday, JDS Uniphase (Research) reported a wider fiscal first-quarter loss versus a year ago that was generally in line with expectations. The company also warned that sales and earnings per share in the fiscal second-quarter will be short of analysts' estimates.
Also after the close, shares of Ask Jeeves (Research) fell more than 15 percent, sending other Internet shares a bit lower.
The Internet search engine reported higher earnings and issued fourth-quarter guidance that was roughly in line with estimates. However, the company's 2005 sales guidance was in a range that puts the midpoint below what analysts are calling for, and that likely sent the stock lower.
Earnings are due before the open Thursday from Aetna (Research), Exxon Mobil (Research), Imclone (Research) and Verizon Communications (Research). (For a preview of these and other key earnings this week, click here.)
Also due Thursday: the weekly jobless claims report, due before the bell. The number of Americans filing new claims for unemployment likely rose to 335,000 last week, from 329,000 the previous week.
Oil brings out bulls
Stocks traded in a tight range at the outset but broke out as oil tanked and key tech stocks recovered. That momentum continued into the afternoon.
Although tech stocks were particularly dominant, gains were broad based, with 27 of 30 Dow issues closing higher.
Oil briefly gyrated after the release of the weekly oil inventory report from the Energy Information Administration (EIA), but then tumbled.
U.S. light crude for December delivery sank $2.71 to settle at $52.46 a barrel on the New York Mercantile Exchange, a decline of 4.9 percent.
"There's a tremendous amount of speculation in that market right now, and I think the weekly report came out and people just jumped on it," said Mark Bryant, senior vice president at Brean, Murray & Co.
The weekly oil report showed a bigger-than-expected rise in crude oil inventories. Gasoline inventories also rose, when analysts were expecting a fall.
On the move
A variety of technology stocks gained.
Intel (up $0.60 to $22.00, Research) popped 2.8 percent, rising with other chip stocks. The Philadelphia Semiconductor (up 14.13 to 410.90, Charts) index, or the SOX, added 3.5 percent.
Other big cap tech gainers included Cisco Systems (up $0.44 to $18.55, Research), up 2.4 percent, Hewlett-Packard (up $0.59 to $18.45, Research), up 3.3 percent and Oracle (up $0.32 to $12.59, Research), up 2.6 percent.
A slew of software issues gained as well, pushing the Goldman Sachs Software (Charts) index up 3.3 percent.
Sina (up $7.10 to $35.29, Research), a leading Chinese Internet search engine, jumped more than 25 percent in active Nasdaq trade. The company reported third-quarter earnings late Tuesday, which rose from a year earlier, and also boosted its fourth-quarter revenue forecast.
It was one of many Internet stocks rising on the day, sending the Goldman Sachs Internet (Charts) index up 3.3 percent.
However, techs weren't the only shares rallying.
Among blue chips, Dow stock DuPont (up $1.52 to $42.92, Research) gained around 3.7 percent, Home Depot (up $1.12 to $40.79, Research) added 2.8 percent and Coca-Cola (up $1.13 to $40.43, Research) rose about 2.9 percent.
Boeing (up $0.12 to $50.10, Research) inched higher after it reported earnings of 44 cents a share, up from a year earlier and more than expected. The commercial and military jet maker also boosted its 2004 earnings forecast.
Unsurprisingly, Exxon Mobil (down $0.44 to $48.95, Research) was one of the few Dow decliners. A variety of oil stocks fell along with the commodity, pushing the Philadelphia Oil Services (up 14.13 to 410.90, Charts) index down 3 percent.
Also falling on the Dow was Procter & Gamble (down $1.43 to $51.78, Research), which lost 2.7 percent even after it reported improved quarterly earnings.
New home sales rise
The morning's economic news was mixed.
New home sales edged up to a 1.2 million annual rate in September, while analysts had expected a decline.
An earlier report showed durable goods orders rose 0.2 percent in September, after falling a downwardly revised 0.6 percent in August. Economists surveyed by Briefing.com thought goods would rise 0.5 percent.
Also impacting trade: speculation about next week's presidential election. Polls show that President Bush and Democratic challenger Sen. John Kerry are neck and neck.
Treasury prices fell sharply in response to the falling crude oil. The 10-year note lost 22/32 of a point in price to yield 4.09 percent, up from 4 percent late Tuesday. Treasury prices and yields move in opposite directions.
In currency trading, the dollar gained versus the euro and inched lower versus the yen.