Dow pushes back over 11,000; Fed chief's words calm nerves

NEW YORK — Wall Street rallied for a second session Thursday as strong earnings from Bear Stearns and mild economic data helped stocks regain their footing after several weeks of hefty losses.

The Dow Jones industrial average jumped 198.27 to 11,015.19, finishing above the closely watched 11,000 mark for the first time since June 6. After shedding 186 points Monday and Tuesday to fall into the red for the first time this year, the Dow saw its best two-day run since April 2003 and the index is back in positive territory for 2006.

Boeing, one of the 30 Dow stocks, soared $2.80 to close at $84.81 a share, a $7.83 gain in two trading sessions and just $4.13 from its 52-week high of $88.94 set May 10.

Microsoft, also a Dow stock, added 19 cents to $22.07, but fell 9 cents in after-hours trading following Chairman Bill Gates' announcement he would relinquish his day-to-day duties overseeing the company during the next two years.

Broader stock indicators also saw strong gains. The Standard & Poor's 500 index gained 26.12 to 1,256.16, and the Nasdaq composite index surged 58.15 to 2,144.15.

Although the day's data gave mixed signals on economic growth, investors again brushed aside worries about inflation and interest rates following a month of selling that pulled the Dow down more than 8 percent.

The Dow jumped 110 points Wednesday as investors came to terms with the likelihood the Federal Reserve will raise rates later this month.

The market turned sharply higher Thursday afternoon after Fed Chairman Ben Bernanke said record energy and commodity prices could account for some of the recent uptick in core prices but that inflation expectations have remained within historical ranges.

Despite two days of sturdy gains, some analysts were skeptical about whether Wall Street has finally reversed course. Stocks are expected to remain volatile until the Fed issues its opinion on the economy's health at the June 28-29 policy meeting.

"I think the market is trying to look beyond any day's set of numbers and the next Fed comment and try to get a real assessment of how this inflection point in the economy is going to play out," said Jerry Webman, chief economist of Oppenheimer Funds.

In economic news, the Fed said May industrial production fell 0.1 percent, below estimates for a 0.2 percent rise and down sharply from a 0.8 percent jump the month before.

The central bank also said capacity utilization dipped slightly to 81.7 percent.

Other reports showed mixed readings on regional manufacturing in June. The Federal Reserve Bank of New York's Empire State index surged to 29 from 12.9 the month before, while the Federal Reserve Bank of Philadelphia said manufacturing activity slowed to 13.1 from 14.4 in May.

The Labor Department also said first-time jobless claims dipped by 8,000 to 295,000 last week, although analysts maintained expectations for the job market to weaken in the coming months.

Bear Stearns' quarterly profit grew 83 percent to easily beat Wall Street estimates, lifted by strength in equity trading and fixed-income revenue. Bear Stearns swelled $7.36 to $131.56.