NEW YORK - Stocks jumped yesterday following a better-than-expected rise in profit at Research in Motion Ltd. and on word that Merrill Lynch & Co. Inc. may have lined up a big cash infusion from a Singapore fund. A strong report on November consumer spending also helped the market.
The Dow Jones industrial average capped a volatile week with a gain of more than 200 points and, along with the other major indexes, posted an increase of more than 1.5 percent.
Yesterday's developments seemed to allay investor fears that economic growth would succumb to tightness in the credit markets. Adding to the measure of relief some investors felt, the Federal Reserve said it would continue with its special biweekly auctions for banks as long as necessary to relieve strains in the short-term-debt market.
The announcements came as the New York Stock Exchange set a record for volume in the first half-hour and hour of trading during what is known as "quadruple witching." That marks the simultaneous expiration of contracts for stock index futures, stock index options, stock options, and single stock futures, and often leads to heavy trading near the start and end of the session.
The Dow rose 205.01, or 1.55 percent, to 13,450.65.
Broader stock indicators also showed strong gains. The Standard & Poor's 500 index rose 24.34, or 1.67 percent, to 1,484.46, and the Nasdaq composite index advanced 51.13, or 1.94 percent, to 2,691.99.
Advancing issues outnumbered decliners by about 3 to 1 on the New York Stock Exchange, where volume came to 2.34 billion shares, compared with 1.38 billion traded Thursday.
Stocks rose for the second day after Research in Motion said late Thursday that its fiscal-third-quarter profit more than doubled on strong demand for its BlackBerry smart phones. The results gave Wall Street hope that the technology sector has room to expand and that consumers and businesses are still spending.
Adding to investors' upbeat mood, the Wall Street Journal reported that Merrill Lynch, facing hefty write-downs due to losing bets on subprime mortgages, is in advanced talks to secure a capital infusion of as much as $5 billion.
Meanwhile, a Commerce Department report on personal spending brought mostly welcome news. Spending rose 1.1 percent in November, the largest amount in 31/2 years, easing concerns that consumers would curtail spending and hurt the economy.
"I think that investors are impressed with the tenacity of the consumer in the face of the current economic headwinds as well as the self-help actions being taken by some of the distressed financial firms," said Alan Gayle, senior investment strategist at Trusco Capital Management.
Bond prices fell sharply as stocks jumped. The yield on the 10-year Treasury note, which moves opposite its price, surged to 4.17 percent from 4.06 percent late Thursday.
Light, sweet crude oil rose $2.25 to settle at $93.31 a barrel on the New York Mercantile Exchange.
With only five trading days left in the year, skepticism remains about whether investors can pull off a sustained rally.
Companies such as Research in Motion have reported solid sales growth, but others have had a harder time staying profitable as U.S. consumers struggle with sinking home prices and high energy and food costs. Research in Motion jumped $11.64, or 11 percent, to $118.63.
Electronics retailer Circuit City Stores Inc. fell $1.91, or 29 percent, to $4.75 after posting a wider-than-expected loss for its latest quarter due to lower extended-warranty sales and restructuring costs.