NEW YORK (AFP) - US stocks surged for a second straight day as investors buoyed by a sharp drop in crude oil prices sent the Dow Jones Industrial Average above the 10,000 mark for the first time in two weeks.
The blue-chip index rallied 113.55 points (1.15 percent) to 10,002.03 and the tech-heavy Nasdaq composite leapt 41.20 points (2.14 percent) to 1,969.99.
The broad-market Standard and Poor's 500 index advanced 14.31 points (1.29 percent) to 1,125.40.
The rally capped two days of sharp gains on Wall Street after the Dow index fell to its lowest levels of the year.
The catalyst was a better-than-expected report on US oil inventories, which eased concerns about tight supplies going into the winter heating season. That prompted a sharp drop in crude futures, which in turn helped the stock market.
New York's benchmark contract, light sweet crude for delivery in December, plunged 2.71 dollars, or 4.9 percent, to close at 52.46 dollars a barrel, a three-week low.
"The market is being driven up primarily or at least 99 percent by the precipitous drop in the price of a barrel of oil," said Art Hogan at Jefferies and Co.
"I am not saying 52 dollars is cheap but it is certainly cheaper than 55 and I think that is driving up the market today. And (the market) was oversold. I don't need much of an excuse to get back into this market when we have done nothing but sell while we are worried about oil."
The market opened on a cautious note as investors digested a big rally Tuesday that saw a 1.42 percent gain for the Dow blue-chip index and a 0.77 percent rise for the tech-heavy Nasdaq, which came after several weak sessions.
Upbeat earnings reports from Boeing and Procter and Gamble set a positive tone in early trade, while economic news was mixed.
One report showed a 0.2 percent rise in big-ticket durable goods orders, which was below most forecasts. But another showed a 3.5 percent increase in new home sales, better than expected.
Peter Boockvar, equity strategist at Miller Tabak and Co., said oil was certainly the trigger for Wednesday's rally but thinks investors also may finally be stepping up as Election Day draws near.
"It could be a pre-election rally -- not necessarily on who's thought to win but that it would actually finally be over with and some of the uncertainty will be lifted," Boockvar said.
"There are certainly people who have been sitting on the sidelines waiting for it to end before committing money to work and when everyone is waiting till after the election, things usually happen before as the market tries to gauge what people are trying to do."
European stock markets joined the rally as the drop in oil prices came near the end of trading.
London's FTSE 100 index gained 1.02 percent to finish at 4,630.1, Frankfurt's DAX jumped 1.73 percent to 3,929.03, while in Paris the CAC 40 rose 1.63 percent to 3,678.39.
The DJ Euro Stoxx 50 index of leading eurozone shares advanced by 1.73 percent to 2,786.89.
Among active US shares, Boeing shares climbed 12 cents to 50.10 after the aerospace giant said its third-quarter profit shot up 78 percent from a year ago to 456 million dollars and gave an upbeat forecast for the rest of 2004 and into 2005.
But fellow Dow component Procter and Gamble slid 1.43 to 51.78 after the consumer products giant reported earnings in line with most estimates.
Northrop Grumman jumped 1.04 to 51.75 after the defense group reported a 51 percent rise in its net quarterly profit.
Apple Computer led the tech sector higher, jumping 2.33 or 4.9 percent to 50.30 after a positive brokerage note from Smith Barney.
Bonds tumbled as investors shifted into stocks. The yield on the 10-year US Treasury bond rose to 4.087 percent from 3.989 percent Tuesday and that on the 30-year bond moved to 4.844 percent from 4.762 percent. Bond yields and prices move in opposite directions.

10/27/2004 - 21:20 GMT - AFP