• Dow Dazzles: Index hits level last seen in 2009
• Blockbuster Bust: Chain contemplates Chapter 11
• U.K. Jobs: Unemployment falls in Britain
• Wholesale Cheer: Prices fall for February

The Lowdown

Stocks surged Wednesday after wholesale goods prices in February posted their biggest drop in seven months, further reducing the threat of inflation. The energy and materials sectors led the climb, while health-care and utilities lagged.

The Dow Jones Industrial Average closed up 48 at points at 10733, its seventh consecutive gain. The S&P 500 rose 7 to 1166 and the Nasdaq rose 11 to 2389. In mid-session, the Dow peaked at 10766, a level last seen in early October 0f 2008, as the index made its precipitous slide following the collapse of Lehman Brothers.

Reducing the threat of inflation and the risk of higher interest rates, the producer price index for finished goods dropped by a seasonally adjusted 0.6% on the month in February, according to the Labor Department, following an unrevised 1.4% increase in January.

The early gains extended a modest climb Tuesday as investors reacted with relief to the Federal Reserve's announcement of its unchanged stance on interest rates.

Among stocks in focus, Fuqi Internationa (FUQI) dropped after the Chinese jewelry company said accounting errors exaggerated earnings in the first nine months of last year and warned that fourth-quarter earnings would be half what it had previously projected.

Hartford Financial Services (HIG) rose in recent trade as the insurer said it will sell $2.38 billion in stock and debt to raise money to repay federal funds it received under the Troubled Asset Relief Program.

CIT Group (CIT) advanced after it said its credit quality improved in the final quarter of 2009, though it forecast a loss this year excluding the impact of accounting changes. The provider of commercial and student loans and equipment-leasing services said it expected its asset base to shrink during 2010 from the $60 billion recorded at year-end as it continues its restructuring after emerging from bankruptcy protection.

In other markets, the dollar strengthened against both the euro and the yen. The pound climbed after the U.K. government reported that the number of people claiming unemployment benefits fell by the largest monthly total since November 1997.

Treasurys were higher, with the 10-year note closing at a yield of 3.63%. Crude-oil futures rose 94 cents $82.64 a barrel while gold futures also moved higher.

Corporate News

• The Dow's economically sensitive components were its strongest performers, with Alcoa (AA) and General Electric (GE) rising early. Caterpillar (CAT) shares also climbed.
• Energy components also strengthened as the price of crude-oil rose 82 cents to $82.52 per barrel. Chevron (CVX) and Exxon (XOM) both rose early.
• Thieves broke into an Eli Lilly (LLY) warehouse in Enfield, Conn. and stole an estimated $75 million worth of antidepressant and antipsychotic drugs.

The Economy

• The core PPI, which excludes volatile energy and food prices and is more closely watched by the Fed, rose 0.1% last month after increasing by 0.3% in January. Economists polled by Dow Jones Newswires were expecting wholesale prices to decline by a more moderate 0.3% last month. Core producer prices were seen rising 0.1%.
• Federal Reserve Chairman Ben Bernanke and ex-Fed chairman and current White House adviser Paul Volcker will be testifying on bank supervision. Mr. Bernanke said the Fed's oversight of state-chartered and community banks helps the Fed set monetary policy and lend to commercial banks, according to his remarks prepared for the House Financial Services Committee, where he will testify Wednesday. STORY

Dow Jones Newswires contributed to this report.