NEW YORK — A sharp slide in the price of oil propelled the Dow Jones industrial average up more than 300 points Friday as investors bet that receding energy costs could stave off inflation and prop up consumer spending.
The dollar, meanwhile, soared against other major currencies, extending a two-week rally on the budding optimism about the U.S. economy.
And a monthlong sell-off in commodities intensified in the wake of recent signs of slowing growth in other countries. A broad commodity index sank 3% as wheat, soybeans and copper extended their descents.
Oil's reversal over the last four weeks has raised hopes that shoppers will plow their savings at the gas pump into clothes, restaurant meals and other discretionary spending. Consumer stocks surged 5.2% on Friday, led by retailers such as Macy's Inc., which shot up 9.6%, and Home Depot Inc., which gained 7.7%.
"This is a good turn across the board," said Marc Pado, U.S. market strategist at Cantor Fitzgerald. "This move reflects a real change of opinion, a real change in the outlook for the U.S. economy, for crude and for gasoline at the pump. As confidence follows these indicators, then we'll see better consumer spending and eventually we'll see more jobs."
The Dow bounded 302.89 points, or 2.7%, to 11,734.32 -- the blue-chip indicator's second 300-point rally in four days.
The Standard & Poor's 500 index advanced 30.25 points, or 2.4%, to 1,296.32. The Nasdaq composite index tacked on 58.37 points, or 2.5%, to 2,414.10.
For the week, the Dow jumped 3.6%, the S&P 500 climbed 2.9% and the Nasdaq surged 4.5%.
Oil futures tumbled $4.82, or 4.2%, to $115.20 a barrel. Crude has slumped more than $30, or 21%, since its record close above $145 on July 3. The decline has led many to conclude that the more than doubling of oil prices from mid-2007 to the middle of this year was a bubble that is now being deflated.
There are still plenty of analysts who view the pullback in crude as nothing more than a temporary correction.
But in a statement that would have been almost unthinkable on Wall Street a month ago, Lehman Bros. analysts told clients Friday that "oil prices have peaked for the next few years."
"Is the bubble now over?" wrote Lehman analyst Edward Morse. "We believe almost certainly."
Showing how much sentiment has shifted in the oil market, crude prices fell Friday despite concerns about potential supply interruptions from a sabotaged pipeline in Turkey and a military conflict between Russia and Georgia.
