Wall Street: Wednesday close

AMERICA's 'shop-till-you-drop' consumers showed surprising stamina in January, boosting hopes for recovery in the world's biggest economy. Retail sales, excluding cars, popped 1.2% in the past month, the strongest performance in nearly two years. The news helped stiffen investors' resolve challenged recently by 'cowboy' accounting concerns.

The Dow Jones Industrial Average, down 21 points on Tuesday after two days of strong gains, surged 125.92 points or 1.3% to 9989,67 in light volume. The Nasdaq Index, off 0.7% on Tuesday, rose 24.95 points or 1.4% to 1859.16.

The latest data, which topped forecasts, pushed retail sales ahead of pre-September levels and showed signs of strengthening further, according to economists. 'People have plenty of cash and the inclination to spend it,' said Ian Shepherdson, chief US economist at High Frequency Economics. Lower energy prices and mortgage costs had put more money in consumers' wallets.

Shares in companies that would benefit quickly from a rebound in the US economy showed good gains. Aluminium company Alcoa jumped 78 or 2.2% to $36.29, General Motors gained $1.63 or 3.3% to $51.20 and consumer products maker 3M firmed $1.64 or 1.4% to $115.81.

Sentiment was helped by hints of a rebound in orders by semiconductor equipment maker Applied Materials, which jumped $3.25 or 7.3% to $47.96. Rival Novellus leapt $2.72 or 6.6% to $43.74.

Mixed news moved the media sector. News Corp. fell $1.36 or 5% to $25.99 and 85%-owned TV network Fox dipped 53 cents or 2.4% to $21.29. News Corp. announced $900m (£588m) in write-offs for TV rights to US football, baseball and race car programming. Chairman Rupert Murdoch said the advertising environment was the worst since World War II, but rival Viacom appeared less concerned. Viacom, which owns MTV and TV network CBS, gained 25 cents or 0.6% to $43.41 after it posted a narrower-than-expected fourth-quarter loss. Walt Disney rose 47 cents or 2% to $23.87.

There was scant market-moving news on the accounting front. Telecoms firm Qwest, which has been asked for details of deals made with bankrupt rival Global Crossing, dipped another 62 cents or 6.7% to $8.59. Conglomerate Tyco International shed $1.60 or 5.3% to $28.90 as it said it would miss second-quarter profit targets.

Microsoft, reported to be the target of inquiries by regulators for allegedly 'smoothing out' profits quarter to quarter, climbed $1.68 or 2.8% to $61.82. Nortel Networks, which disclosed possible insider trading problems on Monday, fell 31 cents or 4.8% to $6.11.

Hewlett-Packard rose 21 cents or 1% to $20.98 before it reported mixed results in its latest quarter, with income rising on sales that were below expectations.