updated 10/13/2006 9:26:03 AM ET 2006-10-13T13:26:03

Stocks surged Thursday, with the Dow Jones industrial average chalking up its fifth record close in two weeks, after big consumer names like McDonald’s Corp. raised hopes that corporate earnings would remain strong and the Federal Reserve said economic growth was moderate.

Major Market Indices

The markets were more upbeat than on Wednesday, which saw a lackluster start to earnings season. Investors seemed to shrug off economic data that could stir concern about the health of the economy and instead focused on positives like low oil prices.

“In general, we’re getting friendly reports between oil inventories being up higher than expected and then some bellwether companies that are exceeding estimates,” said John C. Forelli, portfolio manager for Independence Investment LLC in Boston.

Crude inventories were up by more than Wall Street expected last week. The Energy Department said Thursday that stores of crude increased, though stocks of distillate fuel fell. The price of a barrel of light, sweet crude, which settled at a low for the year on Wednesday, was wavering in trading on the New York Mercantile Exchange . Doubts remained about whether OPEC’s members will be able to agree on an immediate production cut.

Investors got a look at the state of the economy with the release of the Federal Reserve’s Beige Book , which summarizes regional economic activity. The report found that economic growth continued to expand in some areas while it cooled in others.

Over all, however, growth appeared to be moderate or mixed. The findings appeared to reassure investors looking for the economy to slow at a moderate pace. The report found that price pressures were in check in most areas.

The Dow Jones industrial average closed the day up 95.57 points, or 0.81 percent, breaking through 11,900 for the first time and hitting a new intraday record high of 11,959.63. The broader Standard & Poor’s 500-stock index rallied 12.88 points, or 0.95 percent, while the Nasdaq composite index jumped 37.91 points, or 1.64 percent.

Investors have been keeping close tabs on the Fed as they try to gauge how quickly the economy is slowing. The central bank left short-term interest rates unchanged at its last two meetings following a two-year string of 17 straight increases aimed at curbing inflation. The Fed, which released minutes of its last meeting on Wednesday, remains concerned about inflation but has seen signs of an economic slowdown, prompting some hopes, however slim, that a rate cut could be in the offing.

The Commerce Department reported that the country’s trade deficit rose to a record high $69.9 billion in August , a 2.7 percent increase from July. Increased oil imports outpaced a record level of goods and services exports.

Kevin Logan, chief U.S. economist at Dresdner Kleinwort, said the markets tend to show little reaction to the trade data because, in terms of capital flows, foreign investors still prefer to hold dollars, which keeps the dollar stable.

“Without a deprecation of the dollar that forces up interest rates and inflation, then the equity market is not sensitive to changes in the monthly trade balances,” he said.

Some positive corporate news proved reassuring for some investors.

McDonald’s rose 98 cents to $42.23 after saying systemwide same-store sales, or sales at stores open at least a year, rose 9.8 percent in September. The world’s largest fast-food chain, and one of the 30 stocks that comprise the Dow, said its third-quarter profit would top Wall Street’s expectations .

Warehouse chain Costco Wholesale Corp., advanced $3.83, or 7.7 percent, to $53.90 after reporting its fiscal fourth-quarter profit rose 1 percent .

Yum Brands Inc., parent of the Taco Bell, Pizza Hut and KFC fast-food chains, rose $4.51, or 8.3 percent, to $59.08 after reporting that its third-quarter profit rose 12 percent, aided by growth in China. The company raised its full-year profit forecast above Wall Street’s expectation.

PepsiCo Inc. fell $1.01 to $62.85 despite posting a 71 percent increase in its third-quarter profit . The snack food and soft drink maker said sales rose 9 percent from the year-ago period, which was hurt by a tax charge. The company’s forecast, however, was about a penny short of Wall Street’s expectation.

Deluxe Corp., which makes products like checks and business cards, jumped $3.08, or 16.9 percent, to $21.29 after raising its third-quarter and full-year profit forecasts as manufacturing and other costs fell.

CB Richard Ellis Group Inc. rose $1.76, or 7.3 percent, to $25.99 after Standard & Poor’s said it would swap the real-estate company into the S&P 500-stock index to replace BellSouth Corp., which is being acquired by AT&T Inc. AT&T was up 64 cents at $33.60.

Overseas, Japan’s Nikkei stock average closed down 0.19 percent. Britain’s FTSE 100 closed up 0.79 percent, Germany’s DAX index was up 0.67 percent and France’s CAC-40 added 0.91 percent.

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