The Dow Jones industrial average closed just above 10,000 Thursday, a milestone not seen in 18 months that encompassed a painfully deep dive in stocks as well as a surprisingly vigorous rebound.

Traders work on the New York Stock Exchange floor, Thursday Dec. 11, 2003, and watch as the Dow Jones Industrial Average closes abve 10,000 points. The Dow closed up 86.30, or 0.9 percent, at 10,008.16, a milestone not seen in 18 months.  [AP]

Stocks first gained ground on a better-than-expected November retail sales report, then sprinted higher in the late afternoon on a suggestion from the Federal Reserve that higher interest rates weren't coming anytime soon.

The Dow closed up 86.30, or 0.9 percent, at 10,008.16. The last time the index closed above 10,000 was May 24, 2002, when the Dow stood at 10,104.26.

The broader gauges also finished sharply higher. The Nasdaq composite index climbed 37.67, or 2 percent, to 1,942.32. The Standard & Poor's 500 index gained 12.16, or 1.2 percent, to 1,071.21.

"What got the rally started was the Fed," said Michael Murphy, head trader at Wachovia Securities in Baltimore. "It's the old Goldilocks theme — low rates, low inflation and strong growth," explaining that it was the right combination for a strong advance.

"This market is ready to a have good run to the end of the year. People are looking at the economy and are starting to see good growth," he said.

The milestone marked a solid comeback from the Dow's five-year low of 7,286.27 on Oct. 9, 2002 and to many, represents the return of the bull market following three years of bitter declines.

Some analysts had wondered whether the Dow could push past 10,000 on a longer-term basis, citing psychological resistance. Indeed, the blue chips bounced up and down after the Dow crossed the 10,000 mark Tuesday for all of one minute in intraday trading.

Last week, the Nasdaq brushed the 2,000 milestone but has retreated since then on concerns that share valuations, particularly in the tech sector, are a bit lofty.

"Up at this price, everyone is wondering what comes next — whether stocks might be too high," said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co., noting that stocks have rallied since March and might not have much strength to move significantly higher.

"I don't think you're going to see the same kinds of gains next year," he said.

Earlier Thursday, a pair of economic reports gave investors hope the recovery was firmly under way.

U.S. Commerce Department reported a 0.9 percent rise in November retail sales as the nation's shoppers descended on stores with a fresh burst of energy. It was the largest advance since August, and beat the expectations of economists, who had forecast a 0.7 percent rise.

And U.S. Labor Department said new claims for unemployment benefits rose last week by a seasonally adjusted 13,000 to 378,000, suggesting the pace of layoffs is leveling off.

Later Thursday, the Fed released minutes from its October meeting expressing concerns that the job market might remain sluggish until at least 2005. Those comments allayed investor worries that the Fed might raise rates in the near future to stave off inflation in a recovering economy.

As the economy continues to show signs of improvement, analysts say investors are moving out of the tech and small-cap stocks that have led the recovery since March and shifting their profits into larger blue-chip companies.

"People have been sitting right on the fence, wondering, 'Should I take profits now and lock in performance?' But they don't want to miss the next leg up," said Alexander Paris, economist and market analyst for Chicago-based Barrington Research. "So they may be switching to these companies that have less downside risk."

Dow component Home Depot jumped $1.45 to $34.53 after the home-improvement retailer completed a $1 billion share buyback program and approved the repurchase of up to an additional $1 billion of stock.

IKON Office Solutions Inc. rose $1.75 at $10.55 after it agreed to sell certain assets and liabilities of its IOS Capital unit to GE Vendor Financial Services for about $1.5 billion. General Electric Corp. gained 68 cents at $30.40.

Decliners included Goodyear Tire & Rubber Co., which fell 84 cents to $6.52 after the company delayed filing its annual report because of accounting problems in Europe.

Unisys Corp. dropped $1.46 to $14.44 after company executives said they were expecting pension expenses of $80 million to $90 million next year. Though the firm reiterated its outlook, analysts said the expenses were sure to hurt its bottom line in 2004.

Advancing issues outpaced decliners more than 3 to 1 on the New York Stock Exchange. Consolidated volume was moderate at 1.81 billion shares, compared with 1.86 billion traded Wednesday.

The Russell 2000 index, which tracks smaller company stocks, advanced 14.43, or 2.7 percent, to 542.92.

Overseas, Japan's Nikkei stock average finished 1.7 percent higher. In Europe, France's CAC-40 rose 0.8 percent, Britain's FTSE 100 lost 0.1 percent and Germany's DAX index gained 1 percent.

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