NEW YORK (AFP) - Wall Street rebounded this week as investors showed confidence in the US economy despite high oil prices, but the market could stagnate next week ahead of the highly anticipated monthly US unemployment report.
In the week to Friday, the Dow Jones Industrial Average climbed 1.45 percent to 10,192.65, while the Standard and Poor's 500 broad-market index gained 1.93 percent to close at 1,131.50
The tech-heavy Nasdaq composite surged by 3.34 percent to 1,942.20.
The market moved up after dropping last week.
Investors shrugged off a surge in oil prices, with the New York contract closing at 50.12 dollars, the first time it finished the day above 50 dollars. It reached a record 50.47 dollars in New York earlier in the week.
Investors have confidence in the economy and are not worried about the rise in oil prices because it does not believe it will last, said Owen Fitzpatrick, a Deutsche Bank broker.
After dropping 1.6 percent last week, Nasdaq rallied thanks to key upgrades and news that PeopleSoft dumped chief executive Craig Conway, possibly clearing the way for a takeover by Oracle, and further consolidation.
PeopleSoft closed up 2.98 dollars, or 15 percent, at 22.83 dollars while Oracle's stock rose 62 cents, or 5.5 percent, to 11.90 dollars.
Analyst Art Hogan of Jefferies and Co. said it was too early to say for sure that the ouster of Conway clears the way for a merger with Oracle, but Wall Street appears to be seeing it that way.
"The obvious interpretation is that this makes the deal more doable," Hogan said. Hogan expected to see strength in the software sector on anticipation of more merger activity.
"If this deal happens, its starts the daisy chain of a whole lot more merger and acquisition activity," he said.
The Dow Jones Industrial Average moved up despite pharmaceutical giant Merck's announcement Thursday of a global withdrawal of its blockbuster arthritis drug Vioxx. Merck stock plunged 27 percent after the surprise withdrawal.
The week was marked by mostly upbeat economic news including better-than-expected August figures for new home sales and construction spending.
The Institute for Supply Management manufacturing index, while falling to 58.5 percent in September from 59.0 percent in August, still showed strong growth.
"You can't have a strong manufacturing sector without decent underlying economic fundamentals," said Joel Naroff at Naroff Economic Advisors.
The yield on the 10-year US Treasury bond rose to 4.191 percent from 4.031 percent late Friday and that on the 30-year bond to 4.949 percent from 4.811 percent. Bond yields and prices move in opposite directions.
Next Friday, investors will watch unemployment and job creation figures for September. Analysts expect 153,000 new jobs.
Other indicators will come out next week, including the ISM's index for service sector activity, which is expected to have risen by 59 points in September against 58.2 the preceding month. Factory orders are expected to have risen by 0.3 percent in August.