Investors encouraged by prospects for GM, Bank of America.

    Wall Street extended its rally into a third day on a mixed batch of economic data yesterday and some positive corporate news, sending the Dow Jones industrial average back above 7000.

    Stocks are now headed toward their best week since November. Yesterday, every major sector from financial services to technology and health care closed with a gain. Crude oil prices surged 11 percent, to $47.03 a barrel on the New York Mercantile Exchange.

    The Dow, an index of 30 blue chip stocks, climbed 239.66 points, or 3.5 percent, to close at 7170.06. It is up 9.5 percent in the last three days. The Standard & Poor's 500-stock index surged 29.38 points, or 4.1 percent, to 750.74, and the tech-heavy Nasdaq composite index gained 54.46 points, or 4 percent, to close at 1426.10.

    The rally was greeted with some caution as investors questioned how long it could last. Stocks are down 18 percent this year and companies continue to struggle with a deepening global recession.

    Microsoft fell 0.6 percent yesterday, to $17.01 a share, after Morgan Stanley lowered its profit expectations because of the weak market for personal computers. It was the only stock in the Dow to close in negative territory. And the price of gold, a traditional safe haven during market turbulence, gained 1.5 percent, to $923.70 an ounce, and Treasury bonds remain in demand.

    "Gold rallied today because there is still a little apprehension," said Adam Birzgalis, a market strategist for Chicago-based Lind-Waldock. "We don't know where things are going to go."

    But investors clung to nuggets of positive news. General Motors surged 17 percent, to $2.18 a share, after declaring it would not need its next $2 billion in government aid as soon as originally expected. Bank of America was up 19 percent, to $5.85 a share, after chief executive Kenneth D. Lewis said it could report "$50 billion in pre-tax, pre-provision earnings" this year. That follows a similar announcement from Citigroup earlier this week and could indicate some of the nation's troubled banks are on the mend, analysts said.

    Investors even found a silver lining in Standard & Poor's long-expected decision to lower its rating on General Electric, the huge conglomerate, which has been weighed down by concerns about the health of its financing arm. The ratings cut, from "AAA" to "AA+," was smaller than some analysts had expected. That sent the company's stock soaring 13 percent, to $9.57 a share. GE's stock is down more than 40 percent this year.

    "None of this is tremendously good news, but against a backdrop of an oversold market, it doesn't take much to get things going," said Stephen F. Auth, the New York-based chief investment officer at Federated Investors. "Incrementally less bad news could keep things going. Good news is still a ways away; less bad is all you need."

    Poor economic data, pointing to a deepening recession, could not shake investor optimism.

    The number of workers filing for jobless benefits rose 9,000 to a seasonally adjusted 654,000 last week, according to Labor Department data. That was higher than expected, but not as bad as it could have been, analysts said. And the 0.1 percent drop in retail sales in February was less than the 0.5 percent decline analysts expected. That left some analysts cautiously optimistic.

    "Consumers have shown resilience in the past, and perhaps one should never underestimate Americans' propensity to shop, even when economic fundamentals and economic theory suggests more restraint is in order," Michael Feroli, U.S. economist for J.P. Morgan Economics, said in a research note.