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Dow Ends at Highest in a Year as Oil Tops $77

The Dow pulled off a nearly 50-point gain Thursday after a topsy-turvy session as the boost from oil's rally ultimately beat out disappointment in earnings from Goldman Sachs and Citigroup.

The Dow Jones Industrial Average gained 47.08, or 0.5 percent, to close at 10,062.94, its highest close since last October. The S&P 500 added 0.4 percent, and the Nasdaq ticked up 0.1 percent.

This came a day after the Dow topped 10,000 amid earnings optimism.

Microsoft rallied 2.9 percent after RBC raised its price target on the stock to $30 from $27. Microsoft's Windows 7 comes out next week but the company has said it doesn't expect the launch to juice PC sales.

Pfizer was the second biggest percentage gainer on the Dow, up 1.7 percent, as the world's biggest drug maker completed its acquisition of rival Wyeth — making it even bigger.

Energy components ExxonMobil and Chevron also helped carry the Dow to a positive finish — both gained more than 1.5 percent — as oil continued to rise.

Oil barreled higher for a sixth straight day, topping $77 a barrel, after a report showed crude supplies rose by 400,000 barrels, less than expected, last week. And one veteran Nymex trader said ioil will hit triple digitssooner than most people think.

Also giving stocks a boost were a pair of encouraging readings on manufacturing: The Philadelphia Federal Reserve reported its gauge of regional manufacturing slipped slightly — to 11.5 in October from 14.1 in November — but this was the third straight month the gauge was positive. Plus, New York manufacturing unexpectedly rose in September.

In the day's other economic news: Weekly jobless claims dropped to their lowest level since January and consumer prices rose 2 percent, in line with expectations.

Goldman Sachs reported earnings of $5.25 a share — a full dollar above expectations — beating on both earnings and revenue.

But shares fell 1.9 percent as Wall Street's whisper numbers got a little out of control following JPMorgan's beat yesterday.

Adding to the disappointment, Citigroup beat on earnings but didn't beat on revenue, which was weighed down by billions in failed loans. Citi shraes fell 5 percent.

Disappointment in both Goldman and Citi earnings rippled through the financial sector.

Banking analyst Dick Bove said this morning on CNBC that investors shouldn't be selling Goldman or Citigroup stock.

“I would argue that (Goldman’s earnings are) stronger than JPMorgan’s if you look at the whole company,” with JPMorgan doing badly on the traditional bank side of the business, Bove said. "There is no reason not to be buying (Goldman) at this time,” he said.

Bove said Goldman is the best-manged firm in the sector, but Citi's stock has the most growth potential — it could go up to $20, he said. The stock is currently just under $5.

Southwest Airlines reported a loss, attributing it to fuel hedges and an early retirement program, but revenue also declined. Its shares fell 5.7 percent.

US-traded shares of Nokia tumbled more than 11 percent after the handset maker unexpectedly swung to a loss. The company said it was hurt by sagging smartphone sales and writedowns at its networks unit.

Times are tough in hog town, too: Harley-Davidson reported its earnings plunged 84 percent, much more than expected, as sales continued to slide amid the slow recovery. But shares rose 5.5 percent as the company announced it would exit the sport-bike market, discontinuing its Buell motorcycle line, in its latest restructuring move.

Chipmaker Xilinxbeat on both earnings and revenue and it raised its dividend. But the firm's CFO said there may not be as much of a rebound in sales going forward as there has been in the past two quarters, stirring concerns about growth in the sector. Xilinx makes chips used for driver assistance, medical imaging and other applications. Shares fell 1.3 percent.

After the bell today, we'll get reports from Google , IBM and Advanced Micro Devices. All three companies beat expectations.

>> Click Here for the Latest Earnings News

In M&A news, Cisco's bid for videoconferencing firm Tandberg was snubbed by a large shareholder.

The bad news isn't over yet for housing: The latest report from RealtyTrac showed that foreclosures rose more than 5 percent in the third quarter.

On a positive note for housing, the average on the 30-year fixed mortgage rate was 4.92 percent last week, it's third straight week below 5 percent, Freddie Mac reported.

Homeowners have taken advantage of the low rates: In the past five weeks, 3 out of 5 mortgages were for refinancing, according to the Mortgage Bankers Association.

Still to Come:

FRIDAY: Industrial production; consumer sentiment; Fed's Fisher speaks; Earnings from Bank of America, GE, Halliburton and Mattel

Send comments to cindy.perman@nbcuni.com.