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Dow average turns positive for 2011; Google soars

Stephen Holden, center, works on the floor of the New York Stock Exchange with fellow traders, Wednesday, Oct. 12, 2011. Stephen Holden, center, works on the floor of the New York Stock Exchange with fellow traders, Wednesday, Oct. 12, 2011. (AP Photo/Richard Drew)
By Daniel Wagner and Matthew Craft
AP Business Writers / October 14, 2011

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NEW YORK—Stronger retail sales and surging profits from Google sent stocks higher Friday. The Dow Jones industrial average turned positive for the year and the S&P 500 index had its best week in more than two years.

Retail sales increased 1.1 percent in September, the biggest gain in seven months and double what economists projected. Retail sales are a key barometer of consumer spending, which helps drive economic growth. It was the latest positive report on the U.S. economy and added to a growing body of evidence that another U.S. recession isn't as likely as many had feared.

"The market's decline was predicated on the collapse of the euro zone and a U.S. recession," said Dan Greenhaus, chief global strategist at the broker BTIG in New York. "Neither seems likely now."

The Dow rose 166.36 points, or 1.4 percent, to close at 11,644.49. The average of 30 large companies has shot up 9.3 percent after hitting 10,655 on Oct. 3, its lowest level of the year.

The Standard & Poor's 500 rose 20.92, or 1.7 percent, to 1,224.58. The index gained 6 percent this week, the best week since July 2009. It was the highest close for the S&P since Aug. 3, when Washington was in paralysis over raising the country's borrowing limit.

The dollar and U.S. Treasury prices fell as investors moved money into assets that perform better when the economy picks up. The yield on the 10-year Treasury note rose to 2.25 percent, the highest level since August.

Oil and other commodities rose sharply. Energy industry stocks jumped. Exxon Mobil Corp. jumped 2.3 percent to $78.11; Chevron Corp. rose 2.7 percent to $100.47.

Stock indexes have reversed a long slide in recent weeks, helped by better news on the U.S. economy and progress in Europe toward resolving that region's debt crisis. Hiring has picked up, although modestly, and manufacturing continued to grow. The Dow soared 330 points Monday after the leaders of France and Germany pledged to come up with a far-reaching solution to the region's debt crisis by the end of October.

Google Inc. shot up 5.8 percent to $591.68 after its quarterly income jumped 26 percent. Apple Inc. rose 3.3 percent to $422 as its new iPhone went on sale. Record-setting iPhone sales have helped Apple thrive this year even as the economy slowed.

The two tech leaders helped the Nasdaq gain 7.6 percent this week. That's the best week since July 2009. The Nasdaq rose 47.61 points Friday, or 1.8 percent, to 2,667.85.

Navistar International Corp. jumped 7.3 percent to $41.51 on news that the billionaire investor Carl Icahn bought a stake in the maker of military trucks and recreational vehicles.

Retail sales are the government's first look at consumer spending each month. Household spending on everything from clothes to health care accounts for 70 percent of the U.S. economy. If that spending falls sharply, a recession is more likely.

European markets extended an eight-day rally despite an overnight downgrade of Spain by Standard & Poor's and warnings from Fitch about big banks. Food and soap company Unilever PLC announced a major acquisition, and Swiss agrochemicals firm Syngenta reported strong third-quarter sales.

Google reported late Thursday that its third-quarter revenue was one-third higher than last year. It was Google's fourth consecutive quarter of year-over-year revenue growth. Google is doing well because of the reach of its search engine and the effectiveness of its ads.

The government also said Thursday that businesses added to their stockpiles for the 20th consecutive month while sales rose for a third straight month. The increase suggests businesses remained confident enough to keep stocking their shelves.

Five stocks rose for every one that fell on the New York Stock Exchange. Trading volume was below average, 3.7 billion shares.