Stock surge caps good week

As the worst month in 21 years ends, Wall Street hopes bottom has been found

NEW YORK -- The stock market closed out a horrendous October, its worst month in 21 years, with a big advance Friday as more investors took chances on stocks turned into bargains by waves of selling. The advance gave the market its first back-to-back gains in more than a month and fed hopes that Wall Street has indeed found a bottom.

The Dow Jones industrials rose 144 points on the day but ended the month down 14.1 percent. The broader Standard & Poor's 500 index lost 16.9 percent during October as the stock market fell victim to investors' anguish over frozen credit markets and what looked like an inevitable recession.

But the month ended on a more upbeat note than anyone might have expected at the height of investors' despair just weeks ago. The Dow was up 11.3 percent for the week, its best performance in 34 years. The S&P 500 index rose 10.5 percent, a sign of stability that followed a growing sense that the government moves to unlock the credit markets will indeed help the economy move toward recovery.

Investors who have become used to bad economic news dealt calmly Friday with data showing a drop in consumer spending. Another reason for the advance: Mutual funds that dumped stocks furiously as the end of their fiscal year approached were finished selling.

While the market capped a terrible month with a strong week, its direction will probably not be clear until the October employment report comes out next Friday.

The jobs report should provide some insight into how long and how severe the economic downturn could be.

The market is "settling into a little bit of a holding pattern" before the election and jobs report, said Craig Peckham, market strategist at Jefferies & Co. "The fear level has clearly subsided, but there's still a pervasive tone of unease."

The Dow rose 144.32, or 1.57 percent, to 9,325.01. Broader stock indicators also advanced. The S&P 500 index rose 14.66, or 1.54 percent, to 968.75, while the Nasdaq composite index rose 22.43, or 1.32 percent, to 1,720.95.

October marked the Dow's worst percentage loss since 1987. But the 11.3 percent gain for the week -- mostly from an 889-point surge on Tuesday -- gave the Dow its best weekly performance since Oct. 11, 1974.

Crude oil fell $1.35 to $64.61 a barrel in New York. Overseas, Japan's Nikkei stock average fell 5.01 percent. Britain's FTSE 100 rose 2.01 percent, Germany's DAX index rose 2.44 percent, and France's CAC-40 rose 2.33 percent.