Stocks rally, Gold plunges

NEW YORK - A late-afternoon surge pushed stocks higher for the third day straight. The Dow Jones industrial average finished with a gain of 144 points Wednesday, but only after veering much of the day from gains to losses and back again.

Gold plunged $104 an ounce and yields on government bonds rose as investors became less fearful.

An encouraging rise in orders for cars, aircraft, and other long-lasting goods in July helped ease worries that the United States was headed for another recession. The government said durable-goods orders rose 4 percent, the biggest increase since March. Orders fell in June.

The stock market spent the day looking like a driver given bad directions. The Dow headed lower at the start of trading, turned up 115 points by 10 a.m., then pulled another U-turn and lost 48 points shortly after midday.

It rose steadily in the last 90 minutes of trading to end up 143.95 points, or 1.29 percent, at 11,320.71. The Dow had surged 322 points the day before, the biggest gain since Aug. 11.

The Standard & Poor's 500 index rose 15.25 points, or 1.31 percent, to 1,177.60. The broad market measure has surged 4.8 percent for the week. If those gains last through Friday, it would be the first week the index has risen since July 22.

The Nasdaq rose 21.63, or 0.88 percent, to 2,467.69.

Large swings in the stock market have been commonplace this August. In the week after Standard & Poor's stripped the United States of its AAA rating Aug. 5, the Dow alternated between 400-point gains and losses four days in a row. That's never happened before.

Another reason for the recent jumpiness is the overriding fear of a recession. Investors have said they are weighing each economic report for evidence the economy may be heading for a slowdown.

Weak economic data can also be seen as a call for the Federal Reserve to drum up a new rescue effort for the economy, said Abigail Huffman, head of research for Russell Investments. Many investors hope Fed Chairman Ben S. Bernanke will offer some help when he speaks at a summit meeting Friday. It was at that same meeting last year that Bernanke made the case for buying Treasury bonds to lower interest rates and spur spending. That $600 billion bond-buying program, known as QE2, ended in June.

Huffman and other strategists think the Fed is unlikely to start another large bond-buying program. Another stimulus program risks stoking inflation.

Two days after trading above $1,900 an ounce for the first time, gold fell $104 to $1,757 an ounce as investors became less skittish about holding stocks. Gold also lost $30 Tuesday. As of Monday it had risen 15 percent since Aug. 5, when the stock market entered a two-week stretch of heavy turbulence.

Toll Brothers rose 4.6 percent after the Horsham homebuilder reported quarterly income that trounced analysts' estimates. Bank of America Corp. rose 11 percent, the most of any stock in the Dow average, after analysts said a four-day slide had been overdone.