updated 8/29/2006 8:41:16 AM ET 2006-08-29T12:41:16

Wall Street rebounded Monday, as energy prices fell on signs that Tropical Storm Ernesto won’t hit the Gulf of Mexico and as investors grew optimistic about a series of major economic reports on tap this week.

Major Market Indices

Retail and transportation stocks rose as investors believed lower oil prices would help consumer spending. The drop in energy prices also massaged concerns that this week’s data on consumer confidence, job growth, and manufacturing might show the economy is slowing faster than expected.

The market’s advance came amid light summer volume, which is expected to remain thin until after Labor Day. Investors did get a handful of company announcements Monday, including Google Inc. and auction Web site eBay Inc. forming an advertising alliance .

Meanwhile, Kinder Morgan Inc.’s board agreed to take the natural-gas pipeline operator private , and Western Refining Inc. said it was acquiring Giant Industries Inc.

“The message of this week is ‘if a tree falls in the forest, and there’s nobody there, will it make noise?”’ said Larry Peruzzi, a trader with Mellon Financial’s The Boston Co. Asset management. “The market is just looking to head up, not get taken down, and sets up the table for September.”

The Dow Jones industrial average closed the day up 67.96 points, or 0.60 percent, while the broader Standard & Poor’s 500-stock index jumped 6.69 points, or 0.52 percent, having powered near to a three-month high. The Nasdaq composite index picked up 20.41 points, or 0.95 percent.

Bonds were mostly flat, with the yield on the benchmark 10-year Treasury note at 4.80 percent from Friday’s five-month low of 4.79 percent. The dollar was mixed against other major currencies, while gold prices fell.

Energy prices retreated as it appeared Ernesto would likely swipe Florida instead of key oil and gas platforms in the Gulf of Mexico. The price of a barrel of light, sweet crude tumbled on the New York Mercantile Exchange, while gasoline futures also declined sharply.

The decline in energy prices was welcomed by Wall Street after last week’s economic data showed a sharp drop in new and existing home sales. The data prompted concerns about the economy, and threw into question the Federal Reserve’s hope for a soft landing as a result of its string of 17 interest rate hikes.

Investors will be looking for clues as to the Fed’s next move from this week’s economic data, starting with the Conference Board’s consumer confidence report on Tuesday.

Consumer companies moved broadly higher, with Coca-Cola up 19 cents to $44.71, rival PepsiCo adding 82 cents to $65, and Altria rising 5 cents to $84.05.

Retailers, which stand to benefit if consumers are spending less at the pumps, also rose. Wal-Mart Inc. led those gains after reporting over the weekend that August same-store sales rose 2.7 percent. The increase is in line with the retailer’s forecast of same-store sales growth of 1 percent to 3 percent, sending shares higher by 55 cents to $44.43.

Buyers moved back into transport stocks, which had fallen for seven straight weeks. Continental Airlines Inc. rose $1, or 4.4 percent, to $23.96. FedEx Corp. shares picked up $1.75, or 1.8 percent, to $100.90.

Oil companies, which benefit from higher prices if crude supplies are disrupted by a hurricane, dipped as Ernesto was expect to veer away from the gulf. Exxon Mobil Corp., the world’s largest oil company, dropped 33 cents to $70.10, while British Petroleum PLC shed 16 cents to $68.15. Royal Dutch Shell fell 7 cents to $73.12.

Kinder Morgan said a group led by its former founders will take the company private in a cash deal worth $15 billion, plus the assumption of $7 billion in debt. The stock rose $2.57, or 2.5 percent, to $104.27.

Also, Western Refining agreed to buy Giant Industries for $1.23 billion in cash, creating the fourth-largest publicly traded independent oil refiner in the United States. Western Refining dropped 85 cents, or 3.3 percent, to $25.14. Giant Industries surged $10.43, or 15 percent, to $82.22.

Tech stocks advanced after Google and eBay announced they would partner to help buyers quickly do business with online merchants. Ebay, one of the Nasdaq’s most heavily traded stocks, gained 49 cents to $25.79. Google gained $7.69, or 2.1 percent, to $380.95.

Overseas, Japan’s Nikkei stock average lost 1.10 percent at the close. In Europe, where financial markets in London were closed for a national holiday, Germany’s DAX index added 0.75 percent and France’s CAC-40 rose 0.73 percent.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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