Energy Shares Help Lift Market

Stocks rallied Friday, closing out a second straight winning week, as investors continued to snap up energy shares and hunt for potential beneficiaries of a rebuilding boom along the Gulf Coast.

In other trading, gold rose to a nine-month high, in part on worries that U.S. inflation might accelerate in the wake of Hurricane Katrina.

In Tokyo, stocks hit a four-year high ahead of this weekend’s elections.

Wall Street rallied for about half of the session, then held on to its gains into the close of trading. The Dow Jones industrial average rose 82.63 points, or 0.8%, to a one-month high of 10,678.56.

For the week the Dow rose 2.2% after gaining 0.5% the previous week.

Falling oil prices have helped to allay concerns about the economy in Katrina’s aftermath. Near-term crude futures slid 41 cents to $64.08 a barrel, the lowest since Aug. 18, as supply fears eased somewhat. Gasoline futures prices also declined.

“There’s a little more optimism that things are getting better” in terms of oil supplies, said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.

Even so, energy stocks led the market’s advance as investors bet that oil and gasoline prices won’t fall dramatically and that energy company earnings would remain robust.

Shares hitting record highs included Amerada Hess, up $4.92 to $137.40; Chevron, up $1.75 to $63.81; and Occidental Petroleum, up $2.17 to $86.94.

The energy sector’s gains helped to lift the New York Stock Exchange composite index to a record high. It rose 69.18 points, or 0.9%, to 7,663.82.

The Standard & Poor’s 500 index rallied 9.81 points, or 0.8%, to 1,241.48 -- just shy of the four-year closing high of 1,245.04 reached Aug. 3. The S&P; was up 1.9% for the week.

The tech-heavy Nasdaq composite trailed, adding 9.48 points, or 0.4%, to 2,175.51 on Friday and 1.6% for the week.

Winners topped losers by more than 2 to 1 on the NYSE and by 3 to 2 on Nasdaq.

Besides energy issues, many construction-related stocks got a lift as investors bet that those companies would do a robust business in 2006 and beyond, thanks to Gulf-region rebuilding.

Investors “seem to be concentrating on the future rebuilding of the devastated area, and I think that’s what’s keeping the market from declining,” said Peter Cardillo, chief strategist at S.W. Bach & Co.

Pasadena-based Jacobs Engineering jumped $1.34 to $63.33, cement firm Eagle Materials soared $5.84 to $120.47 and steel maker Nucor rose $1.52 to $60.27.

Some investors also went bargain-hunting among insurance stocks, which had fallen after Katrina hit. American International Group rose $1.47 to $61.23 and Hartford Financial was up 93 cents to $76.31.

Gold mining stocks rallied as near-term gold futures gained $2.30 to $449 an ounce, the highest since December. Gold is a hedge against inflation, and some analysts have expressed concerns that inflation could accelerate in coming months because of energy price pressures.

Among mining issues, Newmont Mining rose $1.44 to $42.44, while Goldcorp added 36 cents to $19.56, a record high.

Inflation concerns weren’t evident in the Treasury bond market. Yields were little changed, with the 10-year T-note falling to 4.12% from 4.15% on Thursday. Still, the yield was up from 4.04% a week ago.

After Katrina hit, many bond investors believed the Federal Reserve would put its credit-tightening campaign on hold for a while. But this week several Fed officials hinted that the central bank might not pause. Policymakers meet Sept. 20.

In foreign trading, Japan’s Nikkei-225 index jumped 1.3% to a four-year high of 12,692.04 on expectations that Prime Minister Junichiro Koizumi and his ruling party will gain seats in weekend parliamentary elections and push forward with proposed economic reforms.