Dow Can't Quite Hold 8000

Updated from 4:11 p.m. EDT

Stocks in New York were sharply higher Thursday, extending a global rally and an upbeat start to the second quarter on Wall Street.

The Dow Jones Industrial Average rose 216.48 points, or 2.8%, to 7978.08, and the S&P 500 gained 23.30 points, or 2.9%, to 834.38. The Nasdaq climbed 51.03 points, or 3.3%, to 1602.63.

For a time, the Dow traded above 8000, a level it hasn't closed above since Feb. 9, but selling pressure late in the day pared the index's gain. The S&P and the Nasdaq also finished below their session highs.

Markets around the world were stronger, as well. The FTSE in London added 4.3% and Frankfurt's Dax climbed 6.1%. In Asia, the Nikkei rose 4.4%, while the Hang Seng in Hong Kong surged 7.4%.

Among the biggest gainers on the Dow, Alcoa ( AA) and DuPont ( DD) gained 7.6%, Caterpillar ( CAT) was up 8.8%, and General Motors ( GM) climbed 8.3%.

Financials rose early but gave some of their gains back, with the KBW Bank index up just 1.8% at the end of the day.

The gathering of world leaders at a G-20 summit to discuss strategies to fight the financial crisis and a vote by the Financial Accounting Standards Board to soften fair value, or mark-to-market, accounting rules, overshadowed news from the U.S. government that weekly jobless claims hit the highest level in more than 26 years.

At the G-20 meeting, leaders agreed to provide new resources to the International Monetary Fund, which will likely benefit areas such as Eastern Europe that have been hard hit, says Brian Bethune, chief U.S. financial economist at IHS Global Insight. "Overall it does seem that they are making progress and that there is method to the madness."

The attendees also said they would press for new regulations in an effort to prevent another financial meltdown.

There was a lot of negative sentiment going into the summit, says Anu Sharma, managing director of the Market Intelligence Desk at Nasdaq, "but people are seeing that these countries are open to discussing the issues, that it may be more productive than what we've seen in the past. Now there's positive sentiment building up in the sense that there may be some coordinated efforts to help the global economy."

Some areas, such as materials, were rising on those prospects because they rely heavily on economies in Asia, Sharma says.

"As sentiment changes even slightly you're seeing some of these buy-side firms not wanting to miss a rally, latching on to some gains they've already missed," he says. "They can miss a 2% to 4% move, but can't afford to miss a 7% to 9% move, for instance."

The G-20 wasn't the only group making headlines in Europe, as the European Central Bank lowered its key interest rate to a record low of 1.25% in a bid to stimulate lending in the countries that use the euro. The euro was rising against the dollar, as was the pound.

Underscoring the depth of the recession, the Labor Department said that new claims for jobless benefits rose 12,000 to a seasonally adjusted 669,000 last week, the highest rate since 1982, from an upwardly revised 657,000 the week before. Economists were expecting 650,000 new claims. On Friday, the U.S. government will release an array of employment statistics for March, including the jobless rate.

In corporate news, Dow components General Electric ( GE) and Intel ( INTC) will team up to market and develop home-based health technologies, investing $250 million in the next five years. GE and Intel gained 5.6% and 4.5%, respectively.

Also Dow Chemical ( DOW), which recently bought Rohm & Haas in a $16.5 billion deal, will sell its Morton Salt unit to German fertilizer maker K+S. The deal values the Morton Salt unit at $1.675 billion. Its shares rallied 12.8%.

Checking in on commodities, oil rose $4.25 to settle at $52.64 a barrel, while gold fell $18.80 to $908.90 an ounce.

Longer-dated Treasuries were recently dropping, with the 10-year down 28/32 to yield 2.8%. The 30-year was falling 1-12/32 and yielding 3.6%.

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