NEW YORK — Wall Street soared Thursday, propelling the Standard & Poor's 500 index and Dow Jones industrials to record highs as bright spots among generally sluggish retail sales allowed investors to toss aside concerns about the health of the economy.

The rally, which included the Dow's biggest one-day percentage gain in nearly four years, was perhaps surprising given that there was no extraordinary announcement or other catalyst usually seen with such a huge gain, and that it came before most companies have announced their second-quarter earnings. The rise also marked a sharp contrast to the start of the week, when stocks fell sharply amid concerns that some hedge funds could succumb to ill-placed bets on the housing sector.

But investors, heartened by signs of a happy and spending consumer, clearly decided to put some bets on the table. Though retail sales generally appeared to be crimped last month by higher gasoline prices and a tepid housing market, and the outlook for the coming months was difficult to ascertain, the overall reading wasn't as dour as some investors expected.

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Marriott earnings rise but stock dips

WASHINGTON — Hotel operator Marriott International Inc. said Thursday that its second quarter earnings rose 11 percent on higher demand for rooms, but its stock dipped on signs that growth in the lodging industry may be cooling off.

Marriott shares fell 3 percent in morning trading as it lowered the upper end of its growth forecast for North American revenue per available room, a key hotel industry benchmark. It marked the second time this year that Marriott has trimmed its 2007 revpar outlook.

The Bethesda, Md.-based company reported net income of $207 million, or 51 cents per share, for the three months ended June 15, up from the $186 million, or 43 cents per share, a year earlier.

Revenue rose to $3.21 billion from $2.89 billion a year earlier.

Excluding a charge of $54 million, or 13 cents per share, due to a tax settlement with the federal government and the results of the company's synthetic fuel business, second quarter earnings were $229 million, or 57 cents per share.

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Hopes fall for back-to-school shopping

NEW YORK — Retailers' hopes for a successful back-to-school shopping season grew dim Thursday after they reported generally modest sales gains for June, extending a string of disappointments that began last winter.

As merchants reported their sales results Thursday, it was clear that consumers' uneasiness about higher good and gas prices and the weakening housing market was forcing many to think twice before spending on non-essentials — although consumer electronics like MP3 players and flat-screen TVs had a good month.

The disappointments included department stores like Macy's Inc. as well as apparel chains such as AnnTaylor Stores Corp. Discounters fared well, particularly Wal-Mart Stores Inc., whose renewed emphasis on low prices helped drive sales gains above analysts' expectations.

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Mining giant Rio Tinto bids for Canadian aluminum company Alcan

SYDNEY, Australia — Mining giant Rio Tinto has offered to buy Canadian aluminum company Alcan Inc. for $38.1 billion in cash, the companies said Thursday, in a friendly takeover that tops a hostile bid by U.S.-based Alcoa.

The bid exceeds a $28 billion offer of cash and stock from Alcoa Inc. that Alcan's board rejected in May, and would create the world's largest aluminum company. Alcoa Inc. withdrew its offer on Thursday after being outbid.

Alcoa Chairman and CEO Alain Belda said Rio Tinto's bid "strongly reinforces our view of the underlying value in the aluminum industry and its bright prospects for the future."

In a joint statement, Rio Tinto and Alcan said the Anglo-Australian miner was offering $101 per share for Alcan and that Alcan's board was recommending the deal to shareholders.

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Federal deficit running significantly lower

WASHINGTON — The federal deficit is running sharply lower through the first nine months of this budget year as the growth in revenues continues to outpace spending growth.

The Treasury Department reported Thursday that the government ran a surplus of $27.5 billion in June, up sharply from the $20.5 billion surplus recorded in June 2006. The government normally runs a surplus in June, a month when individual taxpayers and corporations make quarterly payments to the Internal Revenue Service.

With the June surplus, the total deficit through the first nine months of the budget year, which began Oct. 1, is $121 billion, down 41.4 percent from the same period a year ago, when the deficit totaled $206.5 billion.

The Bush administration this week announced a new deficit projection for this year of $205 billion, down significantly from the $244 billion deficit it forecast in February, reflecting the fact that revenue growth has continued to come in at higher-than-expected levels.

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U.S trade deficit climbs to record level

WASHINGTON — America's trade deficit rose to its second-highest level of the year as the price of imported crude oil jumped and demand for Chinese products remained strong despite recalls of tainted products.

The Commerce Department reported Thursday that the deficit for May rose to $60.04 billion, 2.3 percent more than in April. Most of the deterioration in the trade balance reflected a big increase in the foreign oil bill, which swamped record sales of U.S. products abroad.

The Bush administration said the continued rise in exports validated President Bush's campaign for free trade deals and his opposition to raising import barrier.

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Wal-Mart sales exceed expectations

BENTONVILLE, Ark. — Wal-Mart Stores Inc., the world's largest retailer, said Thursday same-store sales in June rose 2.4 percent excluding fuel sales, soaring past the average analyst estimate of a 0.8 percent increase.

The company also maintained its second-quarter earnings guidance, saying its target range is achievable despite a tough environment.

Total sales for the five weeks ended July 6 rose 9.4 percent to $35.81 billion from $32.74 billion, with the namesake Wal-Mart Stores chain posting a 7.1 percent sales gain, to $22.94 billion.

Sales at Sam's Club warehouse chain rose 9.6 percent to $4.42 billion, and international sales climbed 15.9 percent during the month to $8.45 billion.

Same-stores sales in June excluding fuel sales rose 1.6 percent at Wal-Mart Stores and 6.9 percent at Sam's Club stores.

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Huntsman Corp. OKs $6.5B buyout by Apollo Management

SALT LAKE CITY — Chemicals maker Huntsman Corp. agreed to a $6.5 billion buyout offer from an affiliate of Apollo Management LP on Thursday, terminating an earlier deal to sell itself at a lower price to a Dutch company.

Apollo, through its Hexion Specialty Chemicals Inc. unit, had offered $28 a share in cash for Huntsman which had previously accepted a $25.25 a share offer from the Dutch manufacturer Basell AF.

Huntsman gave Basell until Wednesday to raise its bid but said Basell failed to do so.

Huntsman CEO and president Peter R. Huntsman said he couldn't ignore a bid that was hundreds of millions of dollars higher than a deal he hatched with another suitor.

Huntsman's board approved the Apollo deal and has recommended that shareholders vote in favor.

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Gas prices rise, but Midwest refinery may bring relief

NEW YORK — Gas prices rose again at the pump overnight but consumers might see some relief now that a major Midwestern refinery appears ready to restart this weekend following minor repairs.

Meanwhile, oil and gas futures dropped sharply from early highs on a growing sense that refineries are finally starting to produce enough gas to meet demand.

The average national price of a gallon of gas jumped 2.6 cents overnight to $3.026 a gallon, according to AAA and the Oil Price Information Service. Gas prices, which typically lag the futures market, have risen 7.7 cents over the last week after falling steadily from a late May peak of $3.227 a gallon.

Analysts say the July 1 closure of a refinery in Coffeyville, Kan., due to flooding, and the shutdown this week of a huge piece of oil processing equipment at a BP PLC refinery in Whiting, Ind., have sent prices in the Midwest and Plains states sharply higher, boosting the national average.

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S&P, Dow, Nasdaq climb high

According to preliminary calculations, the S&P 500 rose 28.94, or 1.91 percent, to 1,547.70, above its record close of 1,539.18, set June 4.

The Dow shot up 283.86, or 2.09 percent, to 13,861.73; its previous record close was 13,676.32, also set June 4. The Dow also reached a new trading high of 13,869.94.

The Nasdaq composite index rose 49.94, or 1.88 percent, to 2,701.73.

Light, sweet crude for August delivery fell 6 cents to settle at $72.50 a barrel after rising more than a dollar earlier on the New York Mercantile Exchange. August gasoline fell 4 cents to settle at $2.2663 a gallon.

August Brent crude advanced 96 cents to settle at $76.40 a barrel on the ICE Futures exchange in London.