Stocks advanced Friday as strong earnings from Microsoft Corp. and an optimistic outlook from Countrywide Financial Corp. outweighed investor concerns about the US economy.
Friday's report from Countrywide that it expects to return to profitability soon, despite a big third-quarter loss, gave investors hope that the problems in the housing market are contained and that US consumers still have spending power. Thursday night's strong report from Microsoft inspired strong buying throughout the technology sector.
The Dow Jones industrial average rose 134.78, or 0.99 percent, to 13,806.70.
Broader stock indicators also gained. The Standard & Poor's 500 index rose 20.88, or 1.38%, to 1,535.28, and the technology-dominated Nasdaq composite index advanced 53.33, or 1.94%, to 2,804.19.
Countrywide posted a wide loss of more than $1 billion in the third quarter, but the beleaguered mortgage lender, whose stock has plummeted due to rising subprime mortgage defaults, said it will be profitable in the fourth quarter and next year. The shares jumped $4.23, or 32.36%, to $17.30.
Microsoft's reported that its profit jumped 23%, thanks to brisk sales of the new Halo 3 video game, Windows and Office. Microsoft shares rose $3.04, or 9.50%, to end at $35.03.
Stocks surged for a second consecutive day, as higher crude and gold prices helped the oil and mining sectors.
The UK's FTSE 100 Index rose 1.3% to 6,661.30, while France's CAC-40 Index climbed 0.6% to 5,794.87. Germany's DAX Index finished 0.2% higher at 7,949.17.
Royal Dutch Shell gained 3%, continuing its ascent from Thursday when the company reported strong third-quarter results, showing high oil prices helped offset loss of production. UK oil companies BP and BG also rose - BP closed up 2.7% and BG Group closed 2.6% higher.
Most markets rose, with Hong Kong hitting its second straight record close and Japan getting a lift from Honda and Sony earnings.
Hong Kong's Hang Seng index rose 1.8% to close above 30,000 for the first time as property companies rose on hopes of a cut in US interest rates. The blue chip index finished the day at 30,405.22.
Meanwhile, Japanese stocks rose as investors responded enthusiastically to positive earnings from Honda and Sony. The Nikkei 225 average added 1.36% to 16,505.63 points, rebounding from Thursday's 0.5% loss.
The dollar skidded to fresh record lows Friday on speculation that US will cut interest rates again as the post G-7 dollar sell-off came into full swing.
The greenback fell to a record low against the euro at $1.4393, according to Interbank foreign-exchange rates from Dow Jones almost half a cent below its last record low of $1.4348, set Monday.
The dollar also broke through the 96.04 Canadian cents record of modern-era floating exchange rate lows against the Canadian currency, slumping to 95.92 Canadian cents Friday, according to Dow Jones' Interbank rates, its lowest level in 33 years.
The 13-nation euro bought $1.4385 in late New York trading, almost two-thirds of a cent higher than the $1.4319 it fetched Thursday.
The Canadian dollar was just short of $1.04 in late New York trading. The "loonie" was worth $1.0392 late in New York, almost half a cent more than the $1.0347 it bought Thursday.
The Canadian dollar, a commodity-backed currency, first achieved modern-era one-to-one parity with the US dollar on September 20. The US dollar has fallen 17.5% against the Canadian loonie this year. Canada is a major exporter of oil, benefiting when those prices rise.
In other New York trading, the dollar fell against the British pound to $2.0521. On Thursday, the British currency bought $2.0511. The dollar was up against the yen, rising to 114.22 yen on Friday compared with 144.06 yen on Thursday.
Gold surged to its highest level in 27 years on Friday as investors sought refuge from high energy prices and the dollar's decline to fresh lows.
It was a day of records in the commodities market.
Oil prices crossed $92 a barrel for the first time.
Gold topped $780 an ounce as the metal edged closer to its all-time highs in 1980.
Energy prices climbed this week as tensions in the Middle East have grown and supply concerns have mounted.
A barrel of light, sweet crude oil for December gained $1.40 to settle at $91.86 a barrel on the New York Mercantile Exchange, after rising as high as $92.22 in overnight electronic trading. November gasoline futures rose 3.82 cents to $2.274 a gallon, while heating oil futures added 2.41 cents to $2.4325 a gallon.