The Wall Street Journal-20080214-Dow Industrials Climb 1-5-- Boosted by Retail Sales Data

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Dow Industrials Climb 1.5%, Boosted by Retail Sales Data

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Stocks rose for the third straight day amid newfound investor bullishness fueled partly by upbeat economic data.

The Dow Jones Industrial Average rose 1.5%, or 178.83 points, to close at 12552.24 and is down 5.4% this year. It was the biggest gain this month and the first three-day gain since late December.

Technology stocks, one of the hardest-hit sectors this year, enjoyed a rally. The Nasdaq Composite Index had its best day since late November, gaining 2.3%, or 53.89 points, to 2373.93, though it is down 10% in 2008. Shares of tech heavyweights surged, with Apple gaining 3.6% and Research In Motion advancing 5.8%.

"We're by no means out of the woods yet regarding the risks to the economy," said Ryan Jacob, portfolio manager for the Jacob Internet Fund in Los Angeles. "But I think it's definitely true that investors are feeling some temporary relief, which has helped the techs."

The Russell 2000 index of small stocks also gained 2.3%, its biggest one-day gain since Feb. 1.

Early in the day, the Commerce Department reported that retail sales rose 0.3% in January, contrary to economists' expectation of a 0.4% decline. Most investors welcomed the news as a sign that economic growth might not dip into the red this year.

"The psychology out there right now is relentlessly negative, so people take data like today's as a big surprise," said Bank of America economist Mickey Levy, who believes the U.S. economy will soften in the months ahead but avoid a full-blown recession. "Consumption is clearly flattening out, but it's not collapsing."

Investors' mood was tempered by the latest news about the credit crunch -- that the market is drying up for some auction-rate securities.

The two-year Treasury note rose 4/32, or $1.25 for each $1,000 invested, lowering its yield to 1.897%, as investors sought safety -- and liquidity -- in short-term government paper. But the 30-year Treasury bond fell 26/32, or $8.125 for each $1,000 invested, lifting its yield to 4.512%. The Standard & Poor's 500-stock index gained 1.4%, or 18.35 points, to 1367.21 despite a 1.1% decline in its financial sector. The S&P is down 6.9% so far this year.