Stock market soars in late-day rally

The stock market is partying, at least by one measure, like it’s 2007 -- when share prices set record highs.

The market is still way off those peaks, but it closed out May with an explosive surge late Friday propelled by the latest glimmers of hope that the global recession is lifting. The major indexes recorded their third consecutive monthly gains, the first time they’ve done that since reaching all-time highs 19 months ago.

Encouraging economic data released Friday in Japan and India triggered hopes for resurgent global growth, pushing commodity prices up as well as lending support to stocks.

A widely followed index of 19 commodities has shot up 14% since the end of April, its biggest monthly gain in 34 years, as investors have bet that a global recovery would spur demand for all kinds of raw materials.


Commodities also have benefited from a slide in the dollar, which has slumped almost 10% against a basket of six major currencies since early March.

The Dow Jones industrial average Friday rose 96.53 points, or 1.2%, to 8,500.33. The blue-chip indicator climbed 4.1% in May and 20% in the last three months.

The Standard & Poor’s 500 index advanced 12.31 points, or 1.4%, to 919.14. It is up 5.3% since the end of April and 25% since the end of February.

The Nasdaq composite index moved up 22.54 points, or 1.3%, to 1,774.33. It tacked on 3.3% for the month and soared 29% in the last three months.


Still, from their record highs -- set less than three months before the economy switched from expansion to recession -- the Dow has lost 40%, the S&P; 500 index is off 41% and the Nasdaq is down 38%.

Friday’s stock rally was driven partly by relief that long-term Treasury yields had receded since midweek as concern eased among bond investors that soaring government debt issuance would spark rampant inflation. The yield on the benchmark 10-year Treasury fell back to 3.46%, roughly where it began the week, after spiking to 3.67% late Wednesday.

The fury of the advance in stocks since early March has caught many on Wall Street off guard and raised worries that the stampede back into the market is overdone given the still looming dangers in the economy.

“The economy is a different animal than the stock market and financial markets,” said A.C. Moore, chief investment strategist for Dunvegan Associates Inc. in Santa Barbara. “Even though there are green shoots, the economy is still struggling and the housing debacle is far from over.”

In other market highlights Friday:

* Oil prices jumped to a nearly seven-month high. Crude futures rose $1.23 to settle at $66.31 a barrel on the New York Mercantile Exchange.

* Gold continued its latest run at the $1,000-an-ounce level. In futures trading the near-term contract for the metal rose $17.30 to $978.80 an ounce.

* The Russell 2,000 index of smaller stocks jumped 1.9%.


* Advancing stocks outnumbered decliners by more than 3 to 1 on the New York Stock Exchange.

* Overseas, key stock indexes rose 0.8% in Japan, 0.7% in Britain, 0.2% in Germany and 0.4% in France.


The Associated Press was used in compiling this report.