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Stocks Gain, Led by Consumers, Banks

Stocks held significant gains Thursday after a boost in durable goods orders, excluding transportation, and news that the supply of homes on the market were at the lowest level in 42 years.

The Dow Jones Industrial Average soared more than 160 points. All 30 Dow components were higher, led by Caterpillar , Alcoa,, and Hewlett-Packard .

The upbeat tone to the market comes after three lackluster sessionsstalled a rally in the markets that had dominated most of September.

The S&P 500 was up more than 20 points, breaking through it's Monday close of 1,142, a four-month high. The Nasdaq also soared. The CBOE Volatility Index, widely considered the best gauge of fear in the markets, plunged more than 8 percent, below 22.

The top 10 key S&P sectors were higher, led by consumer discretionary, industrials and financials.

Durable goods for August fell 1.3 percent, from a revised 0.7 increase in July, the Commerce Department reported. Excluding transportation, durable goods rose 2.0 percent, more than expected, after falling 2.8 percent in July.

Sales of new homes were unchanged from a revised boost in July, at a seasonally adjusted annual pace of 288,000, the Commerce Department reported. Sales were down by 29 percent from the same month a year earlier.

David Tepper of the hedge fund Appaloosa Management said on CNBC Friday that he's getting back into stocks,and added he's not interested in financials at the moment.

Tepper's bet on financial stocks at the bottom of the financial crisis helped to boost Appaloosa's 2010 returns to 132.7 percent, net of fees. Performance documents from an investor show the fund was up nearly 42 percent through July.

Tepper's comments helped to push futures prices higher, Art Cashin, director of floor operations at UBS Financial Services, said on CNBC.

"You could visibly see futures begin to move when Tepper said he was into stocks," Cashin said.

Other factors helping the market this morning: the sagging dollar, and its boost to multinational companies, the downsizing of the GM deal, and Petrobras' plans to raise $70 billionin what would be the biggest initial public offering in the world, Cashin said.

Meanwhile, inflationary pressures on the horizon are likely to put an end to the bond rally, hedge fund manager Doug Kass said on CNBC. Kass said that shorting bonds will be the "trade of the decade."

Shares of GE and Comcast remained higher after news that Jeff Zucker, CEO of GE's NBC Universal unit, will step down after NBC's merger with Comcast. CNBC.com is a division of NBC Universal.

Nike shares jumped after the athletic clothing and shoe maker reported results that beat Wall Street expectations Thursday after the bell. Nike cited growing demand in North America, China, and emerging markets that helped lift quarterly earnings by 9 percent from a year ago.

Also in earnings news, KB Home's shares rose after the homebuilder reported a narrower quarterly loss Friday as closings rose on homes ordered before the expiration of a federal tax credit.

Chip maker Advanced Micro Devices's shares rose despite joining a list of tech companies warning on revenues this week. AMD said Thursday it expected third-quarter sales to fall due to weaker-than-expected demand, especially among consumers buying laptops in Western Europe and North America.

Oracle was one of a handful of stocks lower among the S&P 500 after news that the software company is ready to make more acquisitionsto boost its technology.

Constellation Energy's shares were slightly higher after Bank of America Merrill Lynch reinstated coverage of the energy company with a "neutral" rating and price target of $35 a share.

Lockheed Martin was higher Friday despite a report by Reuters that the United Kingdom plans to cut back on aircraft purchases from the manufacturer. Also, Morgan Stanley cut Lockheed to "equalweight" from "overweight."

Bank of America Merrill Lynch hasincreased its share of deals in the mergers and acquisitions sector and it looks well-placed for further growth in Europe and Asia. Meanwhile, global M&A deals have come back this year, rising 21 percent so far, according to ThomsonReuters data.

Gold hit a new record highon expectations that quantitative easing by the Federal Reserve could lead to more volatility in the currency markets.

Federal Reserve Chairman Ben Bernanke will speak in Princeton at 4:30 p.m. Analysts expect Fed speakers, including Richmond Fed President Jeffrey Lacker and Philadelphia Fed President Charles Plosser, to drop hints on whether the Fed might move to quantitative easing after its next meeting on Nov. 3.

On Tap Today:

FRIDAY: Richmond Fed President Lacker speaks; Philadelphia Fed President Plosser speaks; NY Film Festival.

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