Stocks Finish Higher

The market rallied into the close as gasoline futures fell

Stocks finished higher Thursday after a rally late in the session, spurred on by a more than 4% drop in the price of gasoline futures and added strength from the semiconductor and Internet groups.

The Dow Jones industrial average rose 79.69 points, or 0.76%, to 10,552.78. The broader Standard & Poor's 500 index was up 10.79 points, or 0.89%, to 1,227.68. The tech-heavy Nasdaq composite index added 25.82 points, or 1.22%, to 2,141.22.

The price of November NYMEX crude oil settled up 44 cents to $66.79 a barrel. Gasoline finished 4% lower, down 10 cents a gallon a $2.24 eased off of morning gains. Still, nearly 25% of U.S. refining capacity remains offline, with 15% likely to remain out of commission in the weeks to come, according to Action Econmics.

In economic news, U.S. initial jobless claims plummeted to 79,000 from 356,000 for the week before. This fell far short of the median forecast of 450,000.

"[This] is consistent with what we see as the normal pattern following a hurricane, [with] the peak in the post-hurricane "jobless surge" occurring in the third week, followed by a big drop," says Action Econmics. "The drop-off implies that the total surge in claims from Katrina will be near 250,000." More jobless claims, this time linked to Hurricane Rita, will be in store in coming weeks, however.

The U.S. Gross Domestic Product for the second quarter remained unreviseed at 3.3%. Personal consumption was reviseed up to 3.4% from 3%, while inventories, net exports, and government spending were revised slightly lower.

In deal news, JP Morgan Chase (JPM ) will sell its online brokerage business, BrownCo, to E*Trade Financial (ET ) for $1.6 billion in cash. E*Trade said it expects the acquisition after integration to be accretive to its earnings by 7 cents per share.

PepsiCo (PEP ) posted its third-quarter earnings on Thursday. The company reported net income of 51 cents, vs. 79 cents per share last year, despite a 13% rise in revenue. The beverage giant noted that excluding one-time charges, third-quarter earnings would have come in at 78 cents per share.

Research in Motion (RIMM ) reported earnings of 56 cents per share in its second quarter, vs. 36 cents per share last year. The makers of the popular Blackberry personal digital assistant saw a 58% rise in revenue, but earnings still came in below estimates. Research in Motion raised its third-quarter revenue guidance, and reiterated its earnings estimate for that quarter.

Treasury Market

Treasury yields moved slightly higher following the much lower-than-expected jobless claims number following Hurricane Katrina, and as traders positioned themselves ahead of Friday's personal income data. The yield on the ten-year note traded at 4.29%.

World Markets

European stock markets finished higher Wednesday. London's Financial Times-Stock Exchange 100 index was down 18.10 points, or 0.33%, at 5,476.70.

Germany's DAX index lost 18.72 points, or 0.37%, moving to 5,030.02. In Paris, the CAC 40 index fell 9.87 points, or 0.21%,to 4,589.76.

Asian markets finished higher on Thursday. In Japan, the Nikkei 225 index rose 181.33 points, or 1.35%, to 13,617.24.

Hong Kong's Hang Seng index gained 209.79 points, or 1.38%, to 15,431.25.

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