SEPTEMBER 24, 2010, 1:44 P.M. ET.

Stocks Jump in Broad Rally

By DONNA KARDOS YESALAVICH

U.S. stocks climbed broadly, capping their fourth-straight positive week with a bang as additional signs of stabilization in the economy made investors more comfortable with risk.

The Dow Jones Industrial Average advanced 188 points, or 1.8%, to 10851, in recent trading. All 30 of the measure's components rose, led by a 4.7% jump in Caterpillar, a 3.7% climb in Alcoa and a 3.3% increase in Cisco Systems. The increase in Caterpillar alone accounted for 27 points, or 14%, of the Dow's gain.

The Dow is up more than 2% for the week, on track to extend its winning streak to a fourth week. In addition, it is up 8.3% for the month, on pace for its biggest September gain since 1939. The measure is now trading at its highest point since May.

"It's encouraging that the Dow has gone above the early August high," said Brian Lazorishak, portfolio manager and quantitative analyst at Chase Investment Counsel. "We'd like to see that confirmed by the transports which hasn't happened yet, but we'll be willing to give it the benefit of the doubt here."

The Dow Jones Transportation Average climbed 2.9% to 4510 Friday, but it is still below the measure's August closing high of 4516.

The Nasdaq Composite advanced 2% to 2374. The Standard & Poor's 500-stock index rose 2% to 1147, with all sectors in positive territory. The industrial and consumer-discretionary sectors led the gains.

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..The rally came despite weaker-than-expected August results for U.S. durable-goods orders and sales of new homes, as investors took comfort in upward revisions in both areas for July, as well as increasing signs of stability.


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Stocks have sprung back into rally mode, as investors look at revisions to summer data suggesting August's concerns may have been overblown. Also, gold crosses the $1,300 threshold. Donna Kardos Yesalavich, Anna Raff and Paul Vigna discuss.
.The durable-goods data showed gains in machinery, computers and fabricated-metal products, while a barometer of capital spending by businesses rose. New-home sales, meanwhile, were unchanged from July. The lack of a drop, combined with other readings on housing this week that topped expectations, provided relief to investors who had been fearful of further deterioration in the industry in the face of high unemployment.

"People may have been concerned about getting a very negative number there so you at least took the negative surprise off the table," Mr. Lazorishak said. "The data is still consistent with the slower-growth environment rather than a double-dip," which is giving investors some comfort, he added.

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.Overseas, the market was bolstered by an unexpected rise in the Ifo index in Germany, a gauge of business sentiment. That helped ease near-term worries over a possible growth slowdown in Europe's biggest economy.

The euro climbed against the dollar in response, rising to $1.3473. The U.S. Dollar Index, tracking the U.S. currency against a basket of six others, fell 0.8%. Crude-oil futures advanced above $76 a barrel, and gold futures rose to a fresh record high above $1,300 an ounce.

The shift toward riskier assets such as stocks and commodities coincided with a move out of the safety of Treasurys, lifting the yield on the 10-year note to 2.60%.

Associated Press

Stock futures rose despite a drop in durable goods orders.
."So many people were moving their money into bonds that it's a natural when you get too much excitement about one asset class the other asset class will start to run," said Barry James, president and portfolio manager at the James Advantage funds. "It can really push the market a good deal."

Among stocks in focus, KB Home gained 3.7%. The home builder's fiscal third-quarter loss narrowed significantly on sharply lower write-downs, while orders declined again following the expiration of a federal tax credit. Deliveries rose, as did the average selling price of a home.

Write to Donna Kardos Yesalavich at donna.yesalavich@dowjones.com

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