Stocks Climb on Economic Hopes

Reports Wednesday showed tame inflation and a rise in industrial production. Thursday's watch list: housing starts and the Philly Fed index

U.S. stocks closed higher Wednesday, rising with commodities prices as investors bet that an economic rebound is underway and inflation remains tame. topic name="general-electric-co" keyword="word or phrase"/> (GE) and other industrial conglomerates were among the top performers.

Data showed gains in the September National Association of Home Builders sentiment index, August industrial production and capacity utilization, as well as a modest 0.1% rise in the August consumer price index (CPI) excluding food and energy. Also, weakness in the dollar aided stocks of companies that do business overseas.

Reports of a pick-up in M&A activity stimulated some investor demand.

On Wednesday, the 30-stock Dow Jones industrial average finished higher by 108.30 points, or 1.12%, at 9,791.71. The broad Standard & Poor's 500-stock index added 16.13 points, or 1.53%, to 1,068.76. The tech-heavy Nasdaq composite index gained 30.51 points, or 1.45%, to 2,133.15.

On the New York Stock Exchange, 25 stocks were higher in price for every five that declined. Nasdaq breadth was 19-8 positive.

The market appeared to be in the midst of a short squeeze ahead of the so-called Quadruple Witching expiration of options and futures later in the week, reports S&P MarketScope.

Treasuries were lower. The dollar index was lower. Gold futures were higher. Oil futures were up after the Energy Dept.'s weekly inventory report showed crude oil stocks fell by a more than expected 4.7 million barrels, gasoline stocks rose 500,000 barrels and distillate stocks rose 2.2 million barrels.

Traders were looking ahead to Thursday's key economic releases: August housing starts, and the Philadelphia Fed index for September.

Investor Warren Buffett was more optimistic on the economy, saying that the situation is immeasurably better than a year ago when he referred to an "economic Pearl Harbor" in a CNBC interview Wednesday.

Citigroup (C) CEO Vikram Pandit said Wednesday "we've turned the corner on capital strength" and are "largely through mark-to-market writedowns," among other optimistic references. Pandit also sees signs of moderation in consumer delinquencies.

Bill Gross, who runs the world's biggest bond fund at Pacific Investment Management Co., increased holdings of government-related debt last month to the most in five years and cut mortgage securities.

In M&A news Wednesday, Adobe Systems (ADBE) agreed to acquire Omniture (OMTR) in a deal valued at about $1.8 billion on a fully diluted equity-value basis.

Adobe also posted third-quarter non-GAAP earnings per share (EPS) of $0.35, vs. $0.50 one year earlier, on a 21% revenue decline. Wall Street was looking for EPS of $0.34.

American Capital Ltd. (ACAS) agreed to sell all the shares of Axygen BioScience Inc. to Corning (GLW) for about $400 million in cash.

Business Exchange

Track and share business topics across the Web.