Shares End Higher With Late-Day Rally

Stocks rose Wednesday as a late-day rally hoisted the Dow and the Standard & Poor’s 500 indexes to their highest levels in more than two months, while gains in computer networking gear makers like Juniper Networks boosted the technology sector.

In a move some analysts said could signal broader gains ahead, a Dow index of major transportation stocks jumped to a 3 1/2-year high.

A pullback in crude oil prices, which slumped on an unexpectedly big rise in U.S. crude oil inventories, helped soothe some of Wall Street’s jitters.

Plans for hefty technology investments by Sprint and SBC Communications, both announced Tuesday, fueled investors’ appetites for telecommunications-related shares, said Jack Caffrey, equity strategist at J.P. Morgan Private Bank.

“You have some investors focusing on the idea that the tech upswing still has some legs to it,” Caffrey said.

The market staged a late-day rally as portfolio managers, encouraged by the market’s recent stability, put fresh money to work, said John O’Donoghue, head of listed trading at Credit Suisse First Boston.

The technology-heavy Nasdaq composite index rose 26.83 points, or 1.4%, to 2,020.98, its highest finish since June 8.

The Dow Jones industrial average gained 84.50 points, or 0.8%, to 10,479.57, its highest close since mid-April. The Standard & Poor’s 500 index also posted its highest close since mid-April, up 9.65 points, or 0.8%, at 1,144.04.

The rally pushed the Dow and Nasdaq back into the plus column for the year to date, with the Dow up 0.25% and Nasdaq up 0.9%. The S&P; 500 is up 2.9% this year.

Trading was active, with advancers outnumbering decliners by about 2 to 1 on both the New York Stock Exchange and Nasdaq.

Treasury bond yields eased after the government saw strong demand at an auction of $25 billion in two-year notes. The yield on the notes was 2.79%.

Indirect bidders, including foreign central banks, bought 61% of the sale, helping allay concern that overseas central banks were losing their appetite for U.S. government debt, especially with the Federal Reserve on the verge of raising interest rates.

The yield on the benchmark 10-year note dipped to 4.70% from 4.72% on Tuesday.

In commodity trading, near-term oil futures fell 68 cents to $37.57 a barrel in New York after a government report showed U.S. inventories rose more than analysts expected last week.

Wall Street’s rally stood in marked contrast to the doldrums of recent weeks, as investors have been seemingly paralyzed by concern over rising interest rates, higher fuel prices and the unrest in Iraq.

But with so much anticipation, analysts say the market is likely to have a muted reaction to the Fed’s June 29-30 meeting, when policymakers are expected to raise their key short-term interest rate to 1.25% from 1%. Also on June 30, the United States is supposed to return sovereignty to Iraq.

The next major development to propel stocks higher may not come until companies start reporting second-quarter earnings next month, many analysts say.

Among Wednesday’s market highlights:

* Some market bulls were encouraged as the Dow Jones transportation index surged 61.44 points, or 2%, to 3,139.27, its highest close since January 2001. Strength in transport stocks often signals optimism about the economy.

Trucker J.B. Hunt rose 90 cents to $36.56, rail giant CSX gained 92 cents to $32.72 and FedEx jumped $1.62 to $80.05.

* Shares in networking equipment makers were broadly higher, led by Juniper and Ciena, as investors placed bets on who might benefit from SBC Communications’ five-year plan to expand its fiber-optic systems. Juniper jumped 12%, or $2.49, to $23.35, and Ciena surged 13%, or 41 cents, to $3.54.

* Salesforce.com, an Internet-based seller of business software, surged $6.20 to $17.20 on its first trading day.

* R.J. Reynolds Tobacco rallied $2.43 to $68.33 on news that its proposed $2.6-billion merger with Brown & Williamson has been approved by the Federal Trade Commission. British American Tobacco, the parent of B&W;, was up $1.35 at $32.12.

* Career Education slumped $14.47, or 25%, to $44.11 after the announcement of a formal Securities and Exchange Commission investigation. The firm said it was cooperating, though it wouldn’t discuss what the SEC was looking at.

Other education stocks declined. Apollo Group dropped $3.55 to $90.62 and Corinthian Colleges sank $1.84 to $25.06.

* Bank of America added 25 cents to $84.77 after announcing a 2-for-1 stock split and a 12.5% increase in its dividend.

Market Roundup, C5