Dow tops 13,000; techs rally, oil falls

By Charley Blaine and Elizabeth Strott

Stocks surged higher today to levels last seen in early January as the dollar rebounded against major currencies and commodity prices -- especially crude oil and gold -- slumped.

The greenback's rally buoyed technology and financial stocks but pushed energy, metals, mining and agriculture stocks lower.

The Dow Jones industrials closed up nearly 190 points, or 1.5%, to 13,010. That was the first close above 13,000 for the blue-chip index since Jan. 3.

The Standard & Poor's 500 Index was up 24 points, or 1.7%, to 1,409. That was the best close for the index since Jan. 14, and technical analysts said it was important because the index has now climbed above 1407, a closely watched level of resistance.

The Nasdaq Composite Index jumped 68 points, or 2.8% to 2,481, also its best close since Jan. 14.

If Friday's payrolls report from the Labor Department is better than expected, the rally could continue. Economists expect April's nonfarm payrolls to show a decline of 75,000 jobs. The report is due at 8:30 a.m. ET.

Pushing the Nasdaq higher were gains for some of the biggest tech stocks, including Apple (AAPL, news, msgs), Research In Motion (RIMM, news, msgs), Comcast (CMCSA, news, msgs), Cisco Systems (CSCO, news, msgs), Google (GOOG, news, msgs) and Microsoft (MSFT, news, msgs).

All were up at least 2%. Apple was up 3.5% to $180, adding nearly 9 points to the Nasdaq-100 Index ($NDX.X).

Microsoft, the publisher of MSN Money, moved 3.1% higher to $29.40 as investors awaited a decision on what the software giant would do about its bid for Yahoo (YHOO, news, msgs). There was increasing speculation this afternoon that Microsoft may abandon the bid. Yahoo fell 2.2% to $26.81.

The Dow was led by a 7% gain to $51.33 for American Express (AXP, news, msgs) and a 4.9% gain to $39.39 for Bank of America (BAC, news, msgs).

Bond insurer MBIA (MBI, news, msgs) was the S&P 500 leader today with a 13% gain to $11.74.

Home builders shot higher, along with financials. The Philadelphia Housing Sector Index ($HGX.X) was up 2.6%. Pulte Homes (PHM, news, msgs) jumped 8.2% to $14.11.

Semiconductor giant Intel (INTC, news, msgs) was third with a 4.6% gain to $23.29. The Philadelphia Semiconductor Index ($SOX.X) was up 3.9% to 400.29.

Chip stocks moved higher after the Semiconductor Industry Association said Worldwide first-quarter sales of semiconductors rose 3.8% to $63.4 billion from $61.1 billion in 2007's first quarter. That was welcome news for the group, whose stocks had slumped since the start of the U.S. economic slowdown. International sales powered the growth.

But the tech euphoria may be pressured Friday after Sun Microsystems (JAVA, news, msgs) surprised investors with fiscal-third-quarter loss and revenue decline. The company blamed a weak U.S. economy for the problem and said it will cut up to 2,500 jobs. Shares fell more than 14% in after-hours trading to $13.97 from a regular close of $16.33.

A rising dollar changes the playing field

Today's rally came despite reports of weak auto sales from just about all manufacturers, including Toyota (TM, news, msgs), and an earnings disappointment from ExxonMobil (XOM, news, msgs). Exxon shares fell 3.6% to $89.70 and were the worst performer among the 30 Dow stocks and 12th worst among S&P 500 stocks.

Crude oil finished the day down 94 cents a barrel to $112.52. It had dropped to as low as $110.30.

The catalyst for the oil price drop -- and a 1.6% drop in the price of gold to $850.90 an ounce -- was the rising dollar, which rose more than 1% against the euro, 0.5% against the yen and 0.6% against the British pound.

The dollar's gain was undoing a major Wall Street play in which investors were raking in big profits betting on commodity stocks because of the falling dollar.

Stocks that had been among the big winners earlier this year were lower today. Potash of Saskatchewan (POT, news, msgs), the fertilizer maker, was off o.4% to $183.16.

Twenty-five Dow stocks finished higher on the day, along with 430 S&P 500 stocks and 92 Nasdaq-100 stocks.

Energy prices -- New York close

	Thur.	Wed.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$112.52	$113.46	-$0.94	-0.83%	17.23%
Heating oil (per gallon)	$3.1177	$3.1770	-$0.0593	-1.87%	17.68%
Natural gas (per million BTU)	$10.5610	$10.8430	-$0.2820	-2.60%	41.13%
Unleaded gasoline (per gallon)	$2.8540	$2.9312	-$0.0772	-2.63%	14.58%

Why ExxonMobil missed

While ExxonMobil reported a 17% increase in net income and a 34% revenue gain to $116.8 billion, the oil giant's earnings of $2.03 a share came up short of the Wall Street consensus estimate of $2.14.

• Top Stocks blog: Exxon: The world's 18th-largest economy?

ExxonMobil explained that rising crude oil prices have led to a contraction in worldwide refining margins. That contraction decreased earnings by about $1 billion, the company said. Refiners have had difficulty pushing soaring crude oil costs through to customers.

The company said that, on a volume basis, production decreased 5.6% from last year. The oil giant also said it bought back 110 million of its shares during the first quarter.

Exxon's profit was the second-highest ever by a U.S. corporation -- after its own all-time record of $11.7 billion in the fourth quarter of 2007.

Chevron (CVX, news, msgs) another Dow component, is expected to announce earnings of $2.39 per share when it reports Friday. Its shares fell 1.3% to $94.94; the loss was the second-worst among Dow stocks after Exxon.

In a note to clients Tuesday, Goldman Sachs analyst Arjun Murti added Chevron to its America's Buy List and upgraded the integrated oil sector to "attractive" from "neutral," saying that the "risk/reward relative to current and expected oil prices has become very attractive."

Short hits from the markets -- 4 p.m.

	Thur.	Wed.	Chg.	Month chg.	YTD chg.
Treasurys
13-week Treasury bill	1.370%	1.340%	0.030	2.24%	-56.37%
5-year Treasury note yield	3.064%	3.033%	0.031	1.02%	-11.32%
10-year Treasury note yield	3.749%	3.759%	-0.010	-0.27%	-7.09%
30-year Treasury bond yield	4.484%	4.497%	-0.013	-0.29%	0.56%
Currencies
U.S. Dollar Index	73.480	72.720	0.760	1.05%	-4.19%
British pound in dollars	$1.9747	$1.9881	-0.0133	-0.67%	-0.73%
Dollar in British pounds	£0.5064	£0.5030	0.0034	0.68%	0.74%
Euro in dollars	$1.5463	$1.5620	-0.0157	-1.01%	5.80%
Dollar in euros	€ 0.6467	€ 0.6402	0.0065	1.02%	-5.48%
Dollar in yen	¥104.33	¥103.93	0.40	0.38%	-6.72%
Canadian dollar in U.S. dollars	$0.982	$0.994	-$0.0124	-1.25%	-1.15%
U.S. dollar in Canadian dollars	$1.020	$1.006	$0.0136	1.35%	1.18%
Commodities
Gold	$850.90	$865.10	-$14.20	-4.36%	1.54%
Copper	$3.6945	$3.9045	-$0.21	-5.54%	21.49%
Silver	$16.2050	$16.5930	-$0.39	-4.44%	8.61%
Corn	$6.0550	$6.0025	$0.05	0.87%	32.93%
Crude oil (NYMEX) (per barrel)	$112.52	$113.46	-$0.94	-5.06%	17.23%

An end in sight to credit crunch?

Treasury Secretary Hank Paulson gave an upbeat outlook on the economy's credit troubles late Wednesday.

"We are closer to the end of this problem than we are to the beginning," Paulson said in an interview with Bloomberg Television. Even with all the "headwinds and despite some of the things that we're going through, this economy is still growing, albeit modestly," Paulson said.

The Bank of England had similar comments about the credit crunch in its biannual Financial Stability Report.

"Prices in some credit markets are likely to overstate the losses that will ultimately be felt by the financial system and the economy as a whole as they appear to include large discounts for illiquidity and uncertainty," the BOE said.

What to do about Yahoo?

Microsoft's board didn't make a decision Wednesday about how to proceed on its $31-per-share bid for Yahoo.

But CEO Steve Ballmer told Microsoft employees today that the company expects to know more "in very short order," the Silicon Valley Insider reported this afternoon.

The software giant has discussed increasing its bid to $32 or $33 per share, The Wall Street Journal reported, but that may not be enough to appease some of Yahoo's big shareholders, who want something in the $35-to-$37 range. (Microsoft is the publisher of MSN Money.)

But Ballmer said today that he won't pay too much. "I know EXACTLY what I think Yahoo is worth and I won’t go a dime above," he was quoted as saying.

Microsoft offered $44.6 billion in cash and stock for Yahoo on Feb. 1, but Yahoo rejected the offer as too low. In early April, Ballmer gave Yahoo a deadline to accept the bid or face a proxy fight from Microsoft. The deadline expired last weekend with no movement from either side.

Most analysts still believe a deal will go through.

"Microsoft should sit down with Yahoo and try to find some kind of compromise as both companies would benefit greatly from a deal," said Stephen Pope, chief global strategist at Cantor Fitzgerald, to Bloomberg. "A hostile bid is not an attractive option, as messy takeover fights are never a good start to the integration of two companies."

Today's economic news

One part of the economy that has been struggling is the jobs sector.

A report from outplacement firm Challenger, Gray & Christmas this morning said that 90,000 jobs were lost in April, up 58% from March. One of every four cuts was in the financial sector, Challenger said.

The report comes a day before the Labor Department's jobs report and a day after ADP showed an unexpected gain of 10,000 private-sector jobs last month. The ADP report does not include government jobs.

This morning, the Labor Department said initial jobless claims rose by 35,000 to 380,000 in the week ending April 26. Analysts had expected a rise to 360,000. Analysts expect Friday's report to show a loss of 75,000 jobs, following a loss of 80,000 jobs in March.

A separate report from the Institute of Supply Management showed continued contraction in the manufacturing sector. The ISM manufacturing index was 48.6 in April, flat from March. A reading above 50 indicates expansion in the sector.

It was the third month in a row of contraction, but the reading was better than economists' expectations of a decline to 48.

Another report had some good news about consumers. The Commerce Department said consumer spending actually rose in March, despite surging food and energy costs. Household spending rose 0.4% in March after a 0.1% gain in February.