NEW YORK (CNN/Money) -
Stocks powered higher Wednesday, as tumbling oil prices further fueled a year-end rally that had lifted indexes to three-and-a-half year highs a day earlier.
The Dow Jones industrial average (up 56.46 to 10,815.89, Charts), which on Tuesday closed at it best level since June 2001, added another 0.5 percent, while the Nasdaq composite (up 6.12 to 2,157.03, Charts) and the broader Standard & Poor's 500 (up 4.12 to 1,209.57, Charts) index each posted gains of about 0.3 percent.
The U.S. Energy Information Administration reported earlier in the day that fuel inventories rose, while analysts had expected stockpiles to drop. Oil prices plunged back below $45 a barrel on the news, with U.S. light crude for February delivery settling $1.52 lower at $44.24 a barrel on the New York Mercantile Exchange.
"Oil prices falling just sparked the market," said Giri Cherukuri, senior trader at OakBrook Investments. "And then the good GDP number this morning didn't hurt either."
Gross domestic product grew at a 4 percent annual rate in the third quarter, better than the earlier estimate of 3.9 percent, the Commerce Department reported. Wall Street had been expecting the figure to stay unrevised at 3.9 percent. GDP rose 3.3 percent in the second quarter.
Tony Dwyer, equity market strategist at FTN Midwest Securities, said the oil news reinforced the market's tendency to climb in a so-called "Santa Claus" rally over the final trading days of the year.
"The bias is up anyway, so now you've got a reason to hold that bias," Dwyer said. "You have to have a reason to be a seller and right now the market hasn't provided any reasons, other than it's up."
At the New York Stock Exchange, advancers led decliners by nearly 3 to 2 on volume of less than 1.4 billion shares, the slowest trading since Dec. 6. At the Nasdaq, advancers edged decliners by better than 6 to 5 on volume of 1.8 billion shares.
Thursday will bring more key economic reports, including a revised reading on consumer sentiment and a Commerce Department report on orders of durable goods.
The University of Michigan's consumer sentiment index is expected to stay unchanged at 95.7. The index stood at 92.8 in November.
Durable goods orders are expected to have climbed 0.7 percent in November after falling 1.1 percent the prior month.
A tally of new home sales is also due Thursday, with November sales expected to have slipped to an annual rate of 1.2 million from a rate of 1.226 million in October.
What Moved Wednesday
Pfizer (up $0.98 to $25.95, Research) continued to rebound after being battered last week on concerns about pain killer Celebrex. Pfizer led all Dow components with a gain of 3.9 percent after adding back 2.8 percent on Tuesday. Nevertheless, shares remain well below the $29 level they saw prior to the Celebrex warning last Friday.
Fellow drugmaker Eli Lilly and Co. (up $0.81 to $56.62, Research) said its restructuring costs would be greater than previously estimated, resulting in a charge of 24 to 27 cents a share instead of the earlier forecast of 19 to 24 cents. Eli Lilly stock rose about 1.5 percent.
Tim Heekin, director of trading at Thomas Weisel Partners, said the gains in those drug stocks were part of a broader sector shift by investors.
"People came in and were buying big-cap pharma," Heekin said, "and people were basically taking some chips off the table in energy."
ExxonMobil (down $0.40 to $51.29, Research) led the losers on the Dow with a drop of about 0.8 percent, while all 27stocks in the S&P 500 Energy index slipped.
Among other movers, drug wholesaler AmerisourceBergen lowered its 2005 earnings guidance to $4 a share from $4.10, citing lower-than-expected increases in drug prices. The company also said it expects first-quarter earnings from continuing operations to come in between 60 and 65 cents per share. Analysts had been expecting 87 cents per share. AmerisourceBergen (Research) stock plunged 7.9 percent.
Mortgage giant Fannie Mae, under mounting pressure after regulators found accounting problems, fired CEO Franklin Raines and CFO Timothy Howard. The company also said it would replace its independent auditor, KPMG. Fannie Mae (up $1.57 to $71.92, Research) shares had jumped nearly 5 percent on the news before pulling back to a more modest 2.2 percent gain.
Microsoft lost an appeal before a European Union court, which ruled that the software titan must change some practices immediately, even before the appeals process is completed.
The ruling forces Microsoft to reveal some of its trade secrets and to unbundle its Windows Media Player from its operating system. Microsoft (down $0.10 to $26.97, Research) shares lost 0.4 percent.
Research In Motion (down $3.55 to $83.49, Research), maker of the BlackBerry wireless e-mail device, reported higher third-quarter profits after Tuesday's close, but the company did not increase its sales forecast for the current quarter. The stock, which has seen strong gains over the past year, dropped 4.1 percent.
Qualcomm raised its fiscal first-quarter forecast, citing strength in shipments of cellphone chips. The company, which had previously projected profits for the quarter in the range of 24 to 26 cents a share, said it now expects to earn 26 to 27 cents a share. Analysts expect 26 cents a share, according to Thomson First Call. Qualcomm (up $0.46 to $44.44, Research) gained more than 1 percent on the day.
Japan Airlines said it will buy 30 Boeing 7E7 Dreamliners, with an option to buy 20 more, in a deal that could be worth as much as $6 billion. Boeing (up $0.49 to $53.91, Research) shares gained 0.9 percent.
Treasury prices fell, pushing the yield on the benchmark 10-year note up to 4.20 percent, from 4.17 percent late Tuesday. Bond prices and yields move in opposite directions.
In currency markets, the dollar moved lower against the Japanese yen and edged higher against the euro.
COMEX gold fell $1.50 to $441.40 an ounce