Inventories Point to Strengthening Economy

Oil giant Chevron Corporation (CVX) saw its earnings estimates boosted on Friday by analysts at UBS.

U.S. stocks rose, sending the Dow Jones Industrial Average briefly above 11,000 for the first time since September 2008, as growth in wholesale inventories added to signs the economy is strengthening.

Chevron Corp. led the Dow’s gain after saying its oil refineries returned to profitability. Dish Network Corp. and Abercrombie & Fitch Co. rallied at least 3.5 percent on analyst upgrades. Equities also advanced as European officials said they’re ready to bail out Greece if needed, assuaging concern a default by the nation will stifle the global economic recovery.

The S&P 500 gained 0.7 percent to an 18-month high of 1,194.37 at 4 p.m. in New York and rose 1.4 percent over the past five days for a sixth-straight weekly gain, its longest streak in a year. The Dow increased 70.28 points, or 0.6 percent, to 10,997.35 and reached as high as 11,000.98.

“We’ve seen some pretty decent strength,” said Walter Todd, who helps manage $800 million in assets at Greenwood Capital Associates in South Carolina. “Look at the cyclically strong economic growth we’re seeing, there’s no question about that, in terms of economic statistics, retail sales, earnings. Everything is looking for a continued recovery in the economy.”

U.S. stocks rose yesterday as retailers rallied on faster- than-estimated sales growth, helping the market recover from an early slump triggered by concern over Greece’s debt crisis. The S&P 500 has climbed 7.1 percent this year and the Dow is up 5.5 percent.

EU Support Plan

The European Union has agreed on a “support plan” for Greece that they are ready to put in place, French President Nicolas Sarkozy told reporters in Paris today. The European Central Bank plans to call a Governing Council teleconference this evening to discuss the latest developments, two people familiar with the matter said on condition of anonymity. An ECB spokeswoman declined to comment.

The lack of detail on a rescue plan and the speed at which the situation is deteriorating mean the nation may need to seek emergency aid from the International Monetary Fund within days, UBS AG economists said.

“The recent market action means that an external intervention may be unavoidable and could happen very soon as the situation is untenable,” UBS economists including Stephane Deo wrote in a note to investors late yesterday. “We think an intervention over the weekend is a distinct possibility.”

Inventories

A Commerce Department report showed inventories at wholesalers rose in February for the first time in three months, a sign companies are ramping up orders as sales climbed. Inventories increased 0.6 percent, more than the 0.4 percent median forecast of 35 economists in a Bloomberg survey.

A gauge of energy companies had the biggest gain in the S&P 500 among 10 industries, climbing 1.1 percent. The group has had the best start to the second quarter, rallying 4.1 percent, followed by financial stocks with a 3.8 percent advance.

Today’s advance in energy equities came even as oil and gasoline retreated. Natural gas surged 4.1 percent after dropping for three days.

Chevron Corp. said its oil refineries returned to profitability during the first quarter as margins earned from processing crude into fuel widened. The second-largest U.S. energy producer advanced 2.4 percent to $79.50, its biggest gain since February.

THE HOT LIST

Hurricane Earl Hot List BUGS, FUEL, BCON, GV, Cat Bonds