Stocks Rally on Upbeat Reports

Stocks rallied and bond yields edged up Thursday in the wake of upbeat economic data, setting the scene for today’s much-anticipated report on March employment.

In commodities trading, gold and silver prices rose to fresh 15-year highs, while oil sank.

The Dow Jones industrial average kicked off the second quarter with a modest gain, adding 15.63 points, or 0.2%, to 10,373.33, after rising as high as 10,419.04 early in the session.

The Nasdaq composite index rose 20.79 points, or 1%, to 2,015.01, and the Standard & Poor’s 500 index added 5.96 points, or 0.5%, to 1,132.17.

Winners topped losers by about 2 to 1 on the New York Stock Exchange and by 7 to 4 on Nasdaq.

Investors were encouraged by a report showing that the U.S. manufacturing sector continued to expand in March, and by a separate report showing fewer new claims for jobless benefits last week.

“The economy should continue to strengthen from here, and the stock market should respond accordingly,” George U. Sauter, who manages $520 billion at Vanguard Group in Malvern, Pa., told Bloomberg News. “We will start to see better numbers on the job front.”

Indeed, market bulls are betting that today’s report on March employment trends will show that the economy finally is beginning to add a significant number of new jobs. Employment growth has been the missing ingredient of the economic recovery.

Faster job growth would give many investors more peace of mind that the recovery is sustainable, even though hiring also could raise corporate costs.

After pulling back for much of March, stocks have rebounded over the last week, fueled in part by expectations that first-quarter corporate earnings reports will be robust.

As stocks have risen, bond yields have crept higher. Bond investors fear that a stronger economy could compel the Federal Reserve to raise interest rates sooner rather than later.

The yield on the benchmark 10-year Treasury note ended at 3.88% on Thursday, up from 3.84% on Wednesday.

Some analysts say that, even if bond yields were to surge because of today’s employment report, the Fed may be on hold for a long while.

“It’s going to take several months of data to convince the Fed” to change rates, Ifty Islam, chief U.S. fixed-income strategist in New York at Deutsche Bank Securities, told Bloomberg News.

Falling oil prices could help to buoy stock and bond markets, analysts say. Crude oil futures slid $1.49 to $34.27 a barrel Thursday, a further drop from recent 13-year highs, on possible federal moves to help shore up gasoline inventories.

Lower oil prices could dampen concerns about inflation. Even so, some investors continue to bid up gold and silver, traditional inflation hedges.

Near-term gold futures in New York added 50 cents to $427.80 an ounce and silver futures rose 20 cents to $8.14 an ounce. Both are at their highest levels in at least 15 years.

Among Thursday’s market highlights:

* Many biotech stocks, among the market leaders in the first quarter, continued to gain. Pharmion rose $1.76 to $24.30, Genentech jumped $3.08 to $108.90 and Neurochem was up $1.12 to $22.44.

* Real estate investment trusts, another first-quarter leader, advanced again. Arden Realty rose 53 cents to $32.86, Mack Cali gained $1.02 to $45.30 and Public Storage added 77 cents to $49.43.

* Insurance stocks were strong. Safeco jumped $1.11 to $44.23, Chubb gained $1.38 to $70.92 and Mercury General rose $1.53 to $51.46.

* In the Internet sector, EBay rallied $2.97 to $72.25, Ask Jeeves rose $1.71 to $37.44 and InterActive was up $1.63 to $33.26.

* Del Mar-based Brookfield Homes rose $2.09 to $37.18. After the close of trading, the firm declared a special $9-a-share dividend. The stock has surged from $28.45 at the end of February.

* Mexico’s main stock index jumped 94.37 points, or 0.9%, to a record 10,611.87, helped in part by a rally in silver-mining stocks as the metal’s price rose.

In Europe, the main German index gained 1.8% and the French market rallied 1.2%.