Stocks Stage Rebound for a Second Session

Investors placated by stable inflation and steady rates extended the stock market’s rebound to a second day Wednesday, but many Wall Street observers saw the advance as a continued break from selling, not the start of a new rally.

Oil prices hit their highest closing level in more than 13 years as a drop in already low U.S. gasoline inventories sharpened the threat of shortages. Energy stocks rose on the news.

U.S. Treasury prices eased as mild profit-taking and the rebound in stocks put a minor dent in recent gains, causing the yield on the benchmark 10-year note to edge up to 3.71%.

The gains on Wall Street marked the first time all three major stock indexes posted two straight positive days since Feb. 10-11, but they remain in negative territory for the year.

The Dow Jones industrial average rose 115.63 points, or 1.1%, to 10,300.30, building on Tuesday’s 81.78-point gain.

The other major indexes were also sharply higher. The Standard & Poor’s 500 index climbed 13.05 points, or 1.2%, to 1,123.75, and the Nasdaq composite index was up 33.67 points, or 1.7%, at 1,976.76.

The consumer price index, a key indicator of inflation, rose by only 0.3% in February, a drop from the 0.5% rise posted in January. Without a major hike in the CPI, it is likely that the Federal Reserve, which kept rates unchanged Tuesday, will maintain that policy, possibly through the rest of the year, analysts said.

Analysts said the market was soothed by the stability of inflation and interest rates, but the advance was perhaps fed more by a natural bounce-back after weeks of selling that accelerated last week. Before Tuesday, the Dow had lost nearly 635 points, or nearly 6%, after reaching a 2004 peak of 10,737.70 on Feb. 17.

“I think we were a little bit oversold over the past week,” said Todd Leone, managing director of equity trading at SG Cowen Securities. “But you’ve got inflation under control, the Fed came out with its statement and the market is responding positively.”

The merger wave moved to the technology sector as Fisher Scientific International announced it would buy Apogent Technologies for $3.7 billion in stock. Both companies make scientific and laboratory equipment. Fisher was down 22 cents to $52.10, while Apogent rose $1.07 to $28.85.

Among Wednesday’s market highlights:

* Energy-related stocks rose sharply, including Schlumberger, up $2.26 to $64.77; Noble Energy, up $1.31 to $47.30; and ChevronTexaco, up $1.24 to $88.92.

* Tech stocks, hit the hardest during the market’s skid, continued their rebound, aided by news that two brokerage firms had upgraded Yahoo. Yahoo rose $2.28 to $44.85, while Intel picked up 63 cents to $27.79.

* The financial sector was again a leading industry, boosted in part by Bear Stearns’ earnings. The investment firm beat Wall Street estimates for the fourth quarter by 52 cents a share and gained 74 cents to $88.74. Citigroup rose 83 cents to $50.82.

* Shipping firms rose, following the lead of FedEx, which surged $3.16 to $71.59 after it narrowly beat analysts’ estimates for its most recent quarter. Profit rose 41% year over year at the shipping giant.

* Scholastic, publisher of the Harry Potter series and other children’s books, fell $2.17 to $29 after posting a quarterly loss that missed Wall Street estimates by 16 cents a share and issuing a worse-than-expected outlook for the year.

Advancing issues outnumbered decliners by nearly 4 to 1 on the New York Stock Exchange in active trading.

Overseas, Japan’s Nikkei-225 stock index jumped 1.7%. Britain’s FTSE-100 gained 0.6% for the session, France’s CAC-40 closed 1.9% higher and Germany’s DAX index climbed 2%.

The dollar fell against the yen but rose against the euro amid speculation Japan may curb its currency interventions at a time when its stock market is attracting more cash.