Not a bad day, all in all. The stock market extended its gains Wednesday for the fourth straight session thanks partly to rising commodity prices and some fairly hopeful news from the Fed. The S&P 500 and the Nasdaq reached 11-month highs as industrial stocks rallied; the Dow Jones industrial average rose 50 points to its second-highest close of the year.

MARKET INDEX WRAPUP, WEDNESDAY, SEPT. 9

The market slipped briefly after the release of the Fed's report on regional economies, which said consumer spending would rise -- but only because of car purchases linked to the government's brief Cash for Clunkers program. The report also said the job market remains weak. (No!) Manufacturing news showed some promise, though; more on the Beige Book report below. (Of all the days to experience technical difficulties . . . .arrrgggghh! . . . that's why I was delayed posting this. In addition, regular readers will notice that these are not my usual graphs; the majority are courtesy of the excellent BigCharts.com. With luck I'll have my usual graphics back next week.)

Industrial shares were big gainers, as investors bet that higher commodity prices will mean increased profits if the economy strengthens; the weaker dollar also makes the goods of U.S. exporters cheaper outside the U.S. — but no economy has ever achieved a lasting strength on weak currency. Caterpillar Inc. (CAT) was a big mover; shares of the maker of construction and mining equipment rose $1.44 or 3.1% to $48.41.

CATERPILLAR:

Boeing Co. (BA) rose $1.03 or 2.1% to $50.53, while General Electric (GE) was up 37 cents or 2.6 % to $14.87.

The Energy Information Administration usually releases its weekly petroleum supplies report on Wednesdays, but this week will release it on Thursday along with the natural gas report. Thanks to a late rebound by the broader market, energy and materials stocks were able to close with at least some dignity. Crude oil prices showed real strength early in the day, finishing with a 0.5% gain at $71.49 per barrel.

AMEX OIL INDEX:

The Dow rose 49.88, or 0.5 percent, to 9,547.22. The index has added 267 points, or 2.9%, in four days. It was the Dow's second-highest close of the year, just below its Aug. 27 finish of nearly 9,581.

DOW JONES INDUSTRIAL AVERAGE:

The broader S&P500 gained 7.98, or 0.8%, to 1,033.37, while the Nasdaq composite rose 22.62, or 1.1 percent, to 2,060.39. It was the highest close for the S&P 500 index and the Nasdaq since October.

S&P 500:

NASDAQ:

Gold prices fell slightly but still within touching distance of $1000 after crossing that mark Tuesday. I mean, where else do you go when the dollar is weak? Gold ended the day at $997.10 per ounce, down a fraction.

Financials had lagged in the early going, but managed to make their way to a 1.4% gain and give support to the broader market. AIG (AIG) was a leader as it bounced back from a two-session slide. Capital One (COF) led financial stocks, thanks partly to an upgrade by analysts at Citigroup, who also said "yes" to shares of MasterCard (MA). Fortress Investment Group (FIG) showed unusual volume at 14.5 million and rose 19% to $5.32, thanks to its own upgrade by Barclay's, who like the whole asset-manager group.

MASTERCARD:

FORTRESS INVESTMENT GROUP:

Advancing stocks outpaced decliners by about 5 to 2 on the New York Stock Exchange.

Bond prices mostly rose. The yield on the 10-year Treasury note was flat at 3.48%.

One thing you may notice about several of today's charts is that prices have moved solidly into new territory and formed support. A good sign. But even little children know that trees don't grow to the sky, so if I were forced to predict, which I'm not really, I'd say that this rally will level off soon and probably make a nice floor.

As for economic reports, they seem — seem — to be getting rosier. Mortgage applications, for example, jumped 'way up last week, as the housing market (except on my block) continues to recover from its anemia. The Mortgage Bankers' Association's purchase application index, admittedly being goosed by the impending end of the government's first-time homebuyer credit, rose 9.5% for the biggest gain since April. The refinance index rose 22.5% for the biggest gain since March. To ice the cake, the average 30-year loan dropped 13 basis points to 5.02%.

One hates to be a party-pooper, but all this hoopla could fade when the first-time homebuyers' tax credit ends at midnight on December 1. In a related note, the Treasury Department released a report of its own which showed that although over 360,000 homeowners had their mortgages reworked lower in August, up over 50% from July, that's still only 12% of eligible homeowners.

Treasury has started releasing monthly reports on its Home Affordable Modification Program, or HAMP, which was launched in February. But the program, which pays cash incentives to mortgage servicers to reduce monthly payments to 31% of a borrower's income, is off to a slow start. Of course, 31% of an unemployed person's income is zero, so it's perhaps understandable that some lenders aren't jumping all over this. If it continues, according to Treasury, we can expect many, many more foreclosures and a revival of the infamous "cramdown" legislation. I'd be remiss if I didn't tell you.

Okay, enough housing gloom.

Shoppers parted with some cash last week: Chain-store sales rose 0.6% from the previous week to an above-trend, year-over-year minus-0.1%, said the International Council of Shopping Centers-Goldman's same-store sales tally (those are stores open at least a year). This is a weekly measure of comparable store sales at major retail chains; it's related to the "general merchandise" portion of retail sales and accounts for about 10% of all of total retail sales. A similar study from Redbook Research showed department stores, which have not been faring well, continuing to struggle, while discount stores did nicely, including in food sales.

RETAIL SALES:

Despite that finding, proven by the fact that every major department store except Kohl's was down significantly year-over-year in August, department store stocks have been doing pretty well. Saks (SKS), Dillards (DDS), Nordstrom (JWN) and Macy's (M), to name a few, are all climbing, although the last two weeks show them taking a rest. Nordstrom is representative:

J.W. NORDSTROM:

True, cooler-than-normal weather, combined with a late start for the school year in some parts of the country, helped the numbers. We should start to see positive year-over-year results in October and November, but it still won't be comparing apples to apples, since those were the months last year when spending really took a dive.

The Census Bureau's quarterly services survey was out today, too; it estimates revenue from information and technology-related service industries -- professional, scientific and technical services; IT; administrative and support services, and waste management and remediation services.

Total revenues for information businesses fell 0.4% in the second quarter to $274.3 billion; year over year, revenues were down 3.3%, same as the first quarter. Revenues at employment services, you won't be shocked to discover, fell 2.7% from the previous quarter for an 11.5% year-over-year decline.

SERVICE SECTOR THROUGH Q1:

And the big dog news that all were waiting for: The Fed's Beige Book, a snapshot of economic conditions in the 12 Federal Reserve districts. According to the Beige Book, economic activity is stabilizing or improving in the vast majority of the country, adding to evidence that the worst recession since the 1930s is drawing to an end.

All but one of the Fed's 12 regions indicated that economic activity was "stable," showed "signs of stabilization" or had "firmed." The one exception was the St. Louis region, which at least reported that the pace of decline in economic activity appeared to be "moderating." This confirms predictions by Fed Chairman Ben Bernanke and most other analysts that the economy has started to grow again in the current quarter.

Businesses in most Fed regions said they were "cautiously positive" about the economic outlook, more optimistic than late July's report. Analysts predict the economy is growing in the current July-September quarter at anywhere between 3% and 4%. Sounds optimistic to me, but I could be wrong. Most of that growth should come from more spending from businesses, which had slashed investments -- often by double-digits -- during the recession.

Before we get too breathless, consumer spending is expected to turn up only because of the binge-buying of automobiles generated by the short-lived Cash for Clunkers program, which like you I don't want to hear too much more about. Aside from brisk businesses at auto dealerships, other merchants struggled, leaving consumer spending soft in most Fed regions.

The prolonged slump in consumer spending has been one of the most serious points of worry for economists, and the Fed's warning about it deflated some of the market's optimism. About 70% of the U.S. economy depends — alas — on spending by consumers.

(All this reminds me of the folk tale about the mythical village of Chelm, where everyone made money by taking in everyone else's laundry. This madness is largely how Gross Domestic Product is calculated and it will be fodder for another column.)

Manufacturers in most regions, though, reported "modest" improvements — a sign I've always considered more indicative of an upturn than consumer spending, as enjoyable as that may be. The San Francisco region said orders rose for semiconductors and other IT products; Richmond, Atlanta, Chicago and Minneapolis reported increases or planned increases in automobile production ad several regions noted more production for pharmaceutical products:

INDUSTRIAL PRODUCTION, JULY:

The Fed also said that the residential real-estate market is no longer comatose, although most Action is coming in at the lower end of the market, again possibly due to that first-time tax credit.

The commercial real-estate market continued to drag. Demand for space remained weak and construction fell again in all regions.

On the jobs front, employment conditions remained weak in all the Fed regions. (No!) The nation's unemployment rate climbed to a 26-year high of 9.7% in August. It is expected to top 10% this year. Many economists predict that rising unemployment will keep consumers cautious.

UNEMPLOYMENT RATE:

The Fed's survey found that some staffing firms reported a "slight pickup" in demand for temporary workers. That's an encouraging sign because employers usually boost use of temp workers before they hire new employees.

And in keeping with the consumer-oriented theme, today's silly graph reveals a fact of shopping life that cannot be denied:


Thursday look for interest rate announcements from the Banks of England and Canada, the International Trade report, jobless claims, and the EIA petroleum and natural gas report. Will we have a fifth straight up day?