NEW YORK — Stocks rose sharply Friday, ending their fourth-straight positive week on a strong note as signs of stabilization in durable goods and housing boosted investors' appetite for risk.
The Dow Jones industrial average advanced 197.84 points, or 1.86 percent, to 10,860.26, its biggest one-day rise since Sept. 1. All 30 of the measure's components rose, led by a 4.6 percent jump in Caterpillar shares, a 3.9 percent climb in Alcoa and a 3.3 percent increase in Bank of America.
The Dow rose 2.38 percent this week, extending its winning streak to a fourth week. The measure hasn't had such a long weekly positive run since an eight-week advance that ended in April.
In addition, the Dow is up 8.44 percent for the month, on pace for its biggest September gain since 1939 and the fifth-best September in the Dow's history. The measure is now trading at its highest point since May.
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The Nasdaq composite added 54.14, or 2.33 percent, to 2,381.22. The Standard & Poor's 500 index rose 23.84, or 2.12 percent, to 1,148.67, with all sectors in positive territory. The industrial and financial sectors led the gains.
The rally came after August results for durable-goods orders and sales of new houses, as investors took comfort in upward revisions in both areas for July, as well as increasing signs of stability.
The durable-goods data showed gains in machinery, computers and fabricated-metal products, while a barometer of capital spending by businesses rose. New-home sales, meanwhile, were unchanged from July. The lack of a drop, combined with other readings on housing this week that topped expectations, provided relief to investors who had been fearful of further deterioration in the industry in the face of high unemployment.
Overseas, the market was bolstered by an unexpected rise in the Ifo index in Germany, a gauge of business sentiment. That helped ease near-term worries over a possible growth slowdown in Europe's biggest economy.
The shift toward riskier assets such as stocks and commodities coincided with a move out of the safety of Treasurys, lifting the yield on the 10-year note to 2.61 percent.
"So many people were moving their money into bonds that it's a natural when you get too much excitement about one asset class, the other asset class will start to run," said Barry James, president and portfolio manager at the James Advantage funds. "It can really push the market a good deal."
Among stocks in focus, KB Home shares gained 3.4 percent. The home builder's fiscal third-quarter loss narrowed significantly on sharply lower write-downs, while orders declined again following the expiration of a federal tax credit. Deliveries rose, as did the average selling price of a house.