Apple's shares shot up nearly 10 percent, their biggest one-day percentage gain since November 2004. Apple's gains increased demand for the shares of other technology companies, including chip maker Intel Corp. , whose chips are used in Apple computers. Intel's stock rose about 1 percent.

The Dow Jones industrial average rose 35.70 points, or 0.32 percent, to end at 11,239.55. The Standard & Poor's 500 Index gained 5.63 points, or 0.43 percent, to finish at 1,311.56. The Nasdaq Composite Index climbed 14.39 points, or 0.61 percent, to close at 2,359.75.

Wall Street got a dose of bad news after the closing bell when a New Jersey jury said drug maker Merck & Co., a Dow component, failed to warn two plaintiffs of increased cardiovascular risk with Merck's arthritis medicine Vioxx.

Merck's stock fell 1.9 percent to $35.32 on the Inet electronic brokerage network from a close at $35.99 on the
New York Stock Exchange. Its after-hours decline, and the reason for it, could weigh on the drug sector and on the Dow industrials when trading resumes on Thursday.

A bright spot after hours, though, was provided by home goods retailer Bed Bath & Beyond Inc., which reported earnings that beat expectations. Its shares rose more than 5 percent to $40.25 after the closing bell on Inet from a Nasdaq close at $38.32.

POLISHING THE APPLE

During the regular session, Apple shares surged 9.9 percent, or $6.04, to end at $67.21on Nasdaq.

Apple said it released software to enable Mac computers to run Microsoft Corp.'s Windows operating system.

"Technology is taking its cue from Apple," said Tim Heekin, director of trading at Thomas Weisel Partners, a San Francisco investment bank.

Microsoft shares gained 0.4 percent, or 10 cents, to end at $27.74, while Intel shares added nearly 1 percent, or 18 cents, to $19.48, both in Nasdaq trading.

The Philadelphia Stock Exchange index of semiconductors rose 2.76 percent.

Providing the biggest lift to the Dow were shares of aluminum producer Alcoa Inc.. The stock rose 2.6 percent, or 81 cents, to $31.67 after Credit Suisse raised its price target on Alcoa to $37 from $35.

Alcoa will kick off the quarterly earnings reporting season next week.

OIL SECTOR PUMPS UP, ST. JUDE FALLS

In the energy sector, ConocoPhillips shares rose 2.2 percent, or $1.41, to $66.56 and helped lift the S&P 500. Valero Energy rose 4.4 percent, or $2.64, to $62.50, while Exxon Mobil Corp. gained 0.7 percent, or 41 cents, to $62.16.

U.S. crude oil for May delivery rose 84 cents to settle at $67.07 a barrel, after a report showed a big drop in gasoline supplies in the latest week.

"We continue to use energy, so the demand side of the equation looks very strong," said John Caldwell, chief investment strategist at McDonald Financial Group, part of KeyCorp.

The health-care sector was among the day's weakest. A drop in the shares of heart-device maker St. Jude Medical Inc. came a day after the company cut its revenue and earnings forecast. The stock fell 12.2 percent, or $5.05, to $36.25, and was among the biggest drags on the S&P 500 index.

U.S. Treasury Secretary

John Snow's comments suggesting strong U.S. payroll figures on Friday revived worries about higher interest rates, limiting the stock market's gains at midday. Snow said he expects U.S. payroll data for March to reflect strength in the economy.

Volume was fairly active on the Big Board, where about 1.61 billion shares changed hands, matching last year's daily average. On Nasdaq, about 2.04 billion shares traded, exceeding last year's daily average of 1.80 billion shares.

Advancers led decliners on the New York Stock Exchange by a ratio of 8 to 5, while on Nasdaq, about six stocks rose for every five that fell.

"It's continuing to gain strength. I look forward to the jobs numbers that we'll be reporting on Friday. I think they'll be good numbers," Snow said.

The Labor Department is scheduled to issue non-farm payroll data for February at 8:30 a.m. EDT on Friday. Economists polled by Reuters forecast a March increase of 190,000 jobs versus a 243,000 gain in February, along with an unchanged unemployment rate of 4.8 percent.

Snow also said he is looking forward to strong figures for first quarter gross domestic product due later this month, noting that private sector economists forecast first quarter growth of 4 to 5 percent.

Snow described that as "strong growth and the sort of growth that will continue to see more jobs created, businesses continue to be profitable, (and) investment occur." He added that would boost government tax receipts that already were running at a rate about 10 percent above last year.

Despite setbacks like Hurricane Katrina, which is costing the government billions of dollars, Snow said maintaining current low tax rates will stimulate growth that will allow
President Bush to meet a goal of cutting federal budget deficit by half by the time he leaves office in 2009.

"I think the American economy today is on a very good path and I'm hopeful that Congress will extend the capital gains and dividend (tax) reductions," Snow told the subcommittee. "Those reductions in tax rates on investment have been at the center of the strong results we've seen."

Snow's upbeat comments on the economy come as Republicans close to the White House have said the administration is increasingly likely to replace him and is considering a number of Wall Street executives and former lawmakers as possible candidates.

These Republican sources have told Reuters the White House wants a more compelling figure than Snow to lead its effort to highlight the strength of the economy ahead of November's congressional elections.

Snow declined to answer reporters' questions about his future at Treasury following the hearing and quickly left the venue of the hearing on Capitol Hill.

Snow told the subcommittee China needed to be more flexible with it yuan currency to fulfill commitments made in July 2005 to make it be more market-driven. "They need to do more. They're being too cautious," Snow said.

However, he said he preferred "quiet diplomacy" to achieve this. He did not address a keenly awaited report due this spring from the Treasury that could declare China a currency manipulator and potentially lead to sanctions.

He said Bush would discuss the issue of opening up China's markets during an April 20 meeting with Chinese President
Hu Jintao in Washington.

Snow added that he expects the yuan later this year to "move more in a direction that has a higher valuation" but did not expect a major revaluation in "one fell swoop."

The recent drop in the number of welfare recipients in the city comes months before the 10th anniversary of the federal welfare overhaul that imposed a five-year limit on assistance, established work requirements and gave states discretion in setting welfare policy. Nationally, the caseload has fallen by more than half since the federal law was signed in August 1996.

The decline in the caseload is occurring amid concerns about income inequality, which has risen more sharply in the city than in the nation as a whole, and new signs that poor families are having a harder time meeting housing and food costs. Last month, Mr. Bloomberg appointed a 32-member Commission for Economic Opportunity to come up with public and private solutions to poverty in the city.

"When I came into office, we were going into an economic slump, and most people thought that the welfare rolls would go up," Mr. Bloomberg said yesterday. "The truth of the matter is, they have gone down."

But welfare recipients who do find work are often in low-paying jobs with limited opportunities for advancement. Of those who have left welfare for work in the city, 88 percent have kept their jobs after three months and 75 percent after six months.

Isabel V. Sawhill, a senior fellow at the Brookings Institution, a research organization in Washington, said the broad decline in welfare caseloads in the last decade could be attributed to three factors: an unusually strong economy in the late 1990's; the federal overhaul that encouraged recipients to find work and financially penalized those who did not; and policies that expanded access to food stamps, child-care subsidies and the earned-income tax credit.

The city's caseload decline since 2004 is surprising because the national caseload decline has slowed significantly, said Gordon L. Berlin, president of MDRC, formerly the Manpower Demonstration Research Corporation, a group in New York and Oakland, Calif., that evaluates social programs.

"The economy has begun to pick up," Mr. Berlin said, "and that's certainly part of the story in New York."

Welfare has been a less prominent issue under Mr. Bloomberg than under Mr. Giuliani, even though the city has maintained the welfare policies started in the mid-1990's. Mr. Giuliani imposed tough eligibility-verification reviews that removed many recipients from the rolls. He also converted welfare offices into job-search centers and required recipients to join the city's Work Experience Program, which placed them in jobs like raking leaves or answering phones. Welfare caseworkers are now called "job opportunity specialists."

"Giuliani gloried in opposing the activist groups and challenging the welfare culture," said Lawrence M. Mead III, a professor of politics at New York University. "The Bloomberg administration continued the Giuliani policies, although without the contentious rhetoric. The change under Bloomberg has been more atmospheric than substantive."

In February 2005, the city's Human Resources Administration began WeCare, which provides medical and psychological assessment and care for recipients who have been unable to find work.

Verna Eggleston, the commissioner of the agency, said it had "abandoned the 'one-size-fits-all' social service program model" in favor of an "individualized model."

WeCare has enrolled about 15,000 adults and is expected to serve 40,000 eventually, said Patricia M. Smith, who has worked for the welfare agency since 1974 and is now its first deputy commissioner.

"We've recognized the shift in the demographics and characteristics of the caseload since the early days of welfare reform," she said, adding that many current recipients have "multiple barriers to employment."

The mayor acknowledged the same problem. "I don't think it's realistic to think that everybody can go to work," he said, "but we are going in the right direction."

Gail B. Nayowith, executive director of the Citizens' Committee for Children of New York and a member of the mayor's commission, said the focus needed to shift to economic security from welfare reform. "Parents are working full time and still poor," she said. "There has to be a greater effort on making work pay."

City Councilman Bill de Blasio, a Brooklyn Democrat who is chairman of the Council's General Welfare Committee, said the decline in the caseload was "very good news" but added that "people who've exhausted their benefits have not necessarily found steady income." In 2004, 20.3 percent of residents and 17.4 percent of families in New York City lived below the poverty line.

Mr. de Blasio and advocates for the poor have estimated that there are hundreds of thousands of residents who are eligible for food stamps or for government earned-income tax credits but have not enrolled. Ms. Smith said the welfare agency was allowing people for the first time to apply for benefits through nonprofit groups and that enrollment in another program, Medicaid, had significantly risen.

"The risk of price declines has increased somewhat, but the national and local economies remain strong, which should support a gradual return to an economic climate characterized by slow, steady appreciation," said Mark Milner, chief risk officer of PMI Mortgage Insurance.

"What we're anticipating is a soft landing nationally," Milner said, referring to home prices. "The markets will be coming back to their long-term average, which is a 4 percent to 6 percent (annual) appreciation rate."

Seven of the top ten markets most vulnerable to declining home prices are in California, which has routinely posted some of the strongest local housing markets as its economy rebounded from the long high-technology slump.

The San Diego regional market is at the top of PMI Mortgage Insurance's list. The region's home prices skyrocketed in recent years, making the market one of hottest in the nation.

Analysts have expected the San Diego market, where the California Association of Realtors pegged the median price of an existing single-family detached home at $608,770 in February, to run out of steam because home buyers can not keep up with both high prices and rising mortgage interest rates.

A similar affordability crunch is spreading as rates increase, raising the probability of declining home prices across the United States, according to PMI Mortgage's report.

On average the 50 biggest housing markets have a 28.7 percent chance of seeing home prices decline within the next two years, according to the report.

"The risks are going up nationally, but they're mitigated by a strong labor market and strong economy," Milner said.

San Diego is showing all the signs all the signs of slowing homes market, said Alan Gin, economist with the Burnham-Moores Center for Real Estate at the University of San Diego.

Homes for sale in San Diego are staying on the market longer and the pace of home sales is off from previous periods, Gin said. Additionally, he noted some home owners with adjustable-rate mortgages loans are struggling to make higher payments as interest rates rise.

"One of the reasons we had the housing market surging ahead was because of the low cost of borrowing money," Gin said. "With mortgage interests rates going up there is some concern some people will be priced out of the market, which in turn will reduce demand for housing ... That leads to lower prices."

Martis noted that the downbeat results from teen retailers - their second straight disappointing month - show that even younger shoppers, who had been splurging on pricey jeans and other fashions, are not spending as much of their discretionary income.

The International Council of Shopping Centers-UBS sales tally of 60 retailers rose a slim 1.9 percent in March, less than the 3.0 percent gain originally expected for the month. It marked the weakest sales growth since November 2004, when the tally rose 1.8 percent.

The tally is based on same-store sales, or sales at stores opened at least a year. Same-store sales are considered the best indicator of a retailer's health.

The tempered sales reports followed a disappointing February, when the ICSC tally posted a 3.2 percent gain. January was a robust month as consumers, armed with holiday gift cards, shopped with gusto, resulting in a 5.0 percent increase.

While temporary factors like the lateness of Easter and cool weather helped limit spending, analysts also said consumers are contending with higher interest rates, which makes financing debt more expensive, and higher gasoline prices. A cooling housing market has also slowed the trend of people taking cash out of their appreciated homes through refinancings and home-equity loans.

One positive factor has been solid gains in the job market, which helped consumer confidence rebound in March to a near four-year high.

A report from The Labor Department released Thursday provided further evidence of a strong job market. The number of Americans filing claims for unemployment benefits fell for a third straight week. The government said that 299,000 laid-off workers applied for jobless benefits last week, down 5,000 from the previous week after declines of 8,000 and 7,000 in the two previous weeks.

Still, analysts say retailers were partly to blame for what is winding up to be a lackluster spring selling season. Stores are showing a great deal of beige and white clothing, a big difference from the bright colors dominating the selling floors a year ago. Teen retailers are doing well with cargo capris, but there isn't one fashion item that is exciting older consumers.

"There's not a lot of compelling fashion," said John Morris, retail analyst at Harris Nesbitt.

Wal-Mart posted a slim 1.4 percent gain in same-store sales, in line with the 1.2 percent estimate from analysts surveyed by Thomson Financial.

Wal-Mart blamed a late Easter, which falls on April 16 and is three weeks later than last year, for depressing results. The retailer said it expects same-store sales gains to improve to 4 percent to 6 percent in April.

Because of the calendar shift, retailers and analysts look at March and April results combined to assess sales trends.

Analysts estimate that the Easter factor depressed sales anywhere from 1 percent to 1.5 percent in March, while April results should be boosted by that amount.

Rival Target Corp. had a 2.2 percent gain in same-store sales, in line with the 2.1 percent increase analysts expected.

Costco Wholesale Corp.'s same-store sales rose 7 percent, beating the 5.9 percent estimate.

Upscale Nordstrom posted a solid 4.3 percent gain in same-store sales, better than the 3.4 percent forecast.

But moderate-priced department stores had more modest gains. Federated Department Stores, which acquired May Department Stores Co. last year, saw its same-store sales unchanged from a year ago. Analysts had expected a 0.6 percent increase. Same-store sales include only Macy's and Bloomingdale's locations. It also forecast a same-store sales decline of 2.5 percent to 3.5 percent in April, reflecting a late Mother's Day.

J.C. Penney, whose results typically please Wall Street, had a disappointing 1.0 percent decline in same-store sales in its department store business. Analysts expected a 2 percent gain.

Limited Brands Inc. had a modest 2 percent gain in same-store sales, below Wall Street's 2.7 percent estimate.

Gap, which continues to struggle to find the right merchandising formula, suffered a 13 percent drop in same-store sales last month, worse than the 7.3 percent decline Wall Street expected.

"Our March performance reflects the challenges we face to increase the frequency of customer visits to our stores," said Sabrina Simmons, senior vice president, treasury and investor relations, in a statement.

Sharper Image posted a 29 percent drop in same-store sales, worse than the 20.2 percent decline analysts expected.

Teen retailers, which have been on a winning streak, also saw business slow last month. Abercrombie & Fitch said same-stores sales were unchanged in March from a year ago. Analysts had expected a 3.6 percent increase.

On Wednesday, American Eagle Outfitters Inc. said same-store sales rose 3 percent, less than the 3.8 percent forecast.

Hot Topic Inc. also had disappointing results, posting a 12.7 percent decline in same-store sales. Analysts expected an 8.7 percent drop. As a result, the company reduced its earnings outlook for the first quarter.

Goodyear Dunlop, the US tyre giant, is to end production at its plant in Washington, Tyne and Wear, with the loss of 585 jobs. A further 39 jobs are at risk at its Wolverhampton site. It said it had been unable to produce tyres at a competitive cost. Richard Johnson, its UK managing director, said: "The market for the type of tyres made in Washington is very competitive and is increasingly dominated by low-cost suppliers from Eastern Europe and the Far East."

The news came as the Office for National Statistics said factory output fell 0.2 per cent for the second month running in February, wrecking hopes of a 0.2 per cent rise. The ONS said the fall was driven by firms cutting production of paints - closely connected to the health of DIY - and drugs, which hit an all-time record in January. Computer makers reported a 5.5 per cent slump in output.

Together with a 1.3 per cent drop in oil, gas and coal production, total industrial production fell by 0.3 per cent.

Meanwhile, a snapshot survey of the services sector showed growth in both output and new orders slowed last month. The Chartered Institute of Purchasing and Supply said its index eased to 57.4 from 58.9 in February, still well above the 50 threshold that separates growth from contraction.

Economists are unanimous that the Bank's Monetary Policy Committee will leave rates unchanged today but are increasingly looking for a cut this year.

President Jacques Chirac called again for "constructive talks" to defuse the crisis as union leaders began meeting with legislators from the governing Union for a Popular Movement Party. Several spoke Wednesday with Bernard Accoyer, who leads the party's bloc in the National Assembly.

A dozen student and union groups met Wednesday, a day after demonstrations brought at least a million people into the streets, and announced that if the government did not act by their deadline, the day after Easter, they would call for a new "day of action."

"The mobilization is not suspended nor canceled," the groups said in a joint statement after the meeting.

The new law, which would allow employers to fire people under age 26 during a trial period without cause, was intended to encourage companies to hire young people. It has tipped the country into a political crisis instead, battering the career of its sponsor, Prime Minister Dominique de Villepin.

Mr. Chirac ratified the law but asked Parliament, rather than his administration, to draft a new law amending the first. That gives Parliament the power to modify the law, according to Mr. Chirac's wishes, or to go further, by revising it in a way that would effectively kill it. Few expect the law to emerge as anything close to what Mr. de Villepin intended.

The main opposition Socialist Party introduced a bill on Wednesday in Parliament to repeal the law and called for it to be passed before the Easter holiday.

The unions, meanwhile, are playing out the dispute to the bitter end because it presents them with their best opportunity in decades to demonstrate their usefulness. Two of France's largest union syndicates, the General Confederation of Labor and the French Democratic Confederation of Labor, will have national conventions this year. Their leaders are under pressure to show results or risk losing their positions.

The dispute could also help expand moribund membership rolls; the rate of unionization in France has fallen by half in the past quarter century. Bernard Thibault, leader of the General Confederation of Labor, the country's largest union syndicate, said Wednesday that he would not give up until the youth contract was withdrawn in full.

"These guys aren't suddenly going to change their line," said Guy Groux, a union specialist at the Paris Center for the Study of French Political Life.

A student leader, Bruno Julliard, called for protests that have shut dozens of French universities and high schools to "intensify" in the coming days. Students blocked roads in various French cities on Wednesday and briefly occupied a train station in Chambéry and a postal sorting center in Toulouse.

The standoff over the law, pushed through by Mr. de Villepin in February, continued to pummel his popularity. In an opinion poll to be published this week in the magazine L'Express, 45 percent of those surveyed said he should resign.

"What use is Villepin?" read a headline in the newspaper Le Parisien. The prime minister is expected to defend his position at a news conference on Thursday.