updated 9/30/2004 9:46:23 AM ET 2004-09-30T13:46:23

Stocks rebounded Tuesday, with the Dow Jones industrial average rising solidly above 10,000 as investors, less anxious about volatile energy prices, focused instead on good corporate news.

Major Market Indices

Light crude for November delivery surged above the psychologically important $50 milestone early in the session, but backed off that record high after Saudi Arabia indicated it would raise its output if necessary. Nervous about rising energy costs, investors had turned to the safety of Treasury bonds lately, but with the third quarter drawing to a close and oil prices easing, they seemed ready to return to stocks — especially after several sessions of equity declines.

“All attention is definitely being paid to oil today, and the fact that it’s trading off its highs is definitely helping equities,” said Brian Williamson, an equity trader at The Boston Company Asset Management. “You can definitely make a correlation today between the bond market selling off ... and the momentum in U.S. equities.”

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The Dow Jones industrial average closed up 88.86, or 0.9 percent, at 10,077.40.

The broader gauges also posted gains. The Standard & Poor’s 500 index added 6.54, or 0.6 percent, to 1,110.06. The Nasdaq composite index added 9.99, or 0.5 percent, to 1,869.87.

In economic news, consumer confidence declined for a second straight month, according to the Conference Board. The index fell 1.9 points to 96.8 from a revised reading of 98.7 in August. Analysts had expected a reading of 99.5. Economists blamed the decline on soft labor market conditions.

Moderating crude prices, a Saudi Arabian oil official said his country would raise its daily production capacity by 15 percent in an effort to calm the market. The move essentially allows the world’s largest petroleum exporter to raise production at will, depending on demand.

Oil prices remained quite volatile, however, as increased fighting in Nigeria forced several companies to shut down production and evacuate workers. Rebels in Nigeria, the world’s seventh-largest crude exporter, are battling for control of the nation’s southern oil fields. Light, sweet crude for November delivery settled up 26 cents at $49.90.

Uncomfortably high oil prices have dogged the equity market for months, and the major indexes all posted steep declines over the last week amid mounting worries about rising business expenses and falling consumer spending. Analysts are largely upbeat about the market’s underlying fundamentals, but given all the uncertainties surrounding energy costs, the jobs picture, the upcoming presidential election and persistent terror fears, few were convinced the upward move would last.

“If this rally didn’t hold today, it wouldn’t surprise me at all. I just can’t imagine a lot of people getting really enthused right now, saying ’Gee, oil is near $50 a barrel, confidence is down, let’s go buy some stocks,”’ said Scott Wren, equity strategist for A.G. Edwards & Sons. “But hopefully if they’re looking down the road, they’ll see there are some stocks that have sold off, so if you’re trying to position yourself for the next year, there are opportunities out there.”

AtheroGenics Inc. soared 64 percent, or $14.84, to $38 on news that an interim analysis of a treatment to cut arterial plaque might help reverse the progression of heart disease.

Valero Energy Corp. gained $2.04 to $79.09 after the oil refinery operator raised its third-quarter earnings forecast.

Lowe’s Cos. gained 33 cents to $53.76 after the home improvement retailer reiterated its earnings projections for the quarter and the year, and issued a bright forecast through 2006 based on an expectation of robust sales growth next year.

Chipmaker Cypress Semiconductor Corp. was down 29 cents at $8.60 after warning that lower-than-expected revenues would lead to a third-quarter loss on weakening demand and sluggish business improvement.

Google Inc. rose 7.3 percent, or $8.60, to $126.86, after several brokerage firms initiated coverage of the stock with high expectations, including Credit Suisse First Boston and J.P. Morgan.

Starbucks Corp. added 20 cents to $44.58 after saying it would raise the average price of its beverages by 11 cents at its 4,500 stores across North America because of increases in the cost of coffee and sugar.

Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange.

The Russell 2000 index, which tracks smaller company stocks, was up 7.30, or 1.3 percent, at 565.66.

Overseas, Japan’s Nikkei stock average fell 0.4 percent. In Europe, France’s CAC-40 added 0.3 percent, Britain’s FTSE 100 rose 0.6 percent and Germany’s DAX index gained 0.2 percent.

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

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