Wall Street ended a turbulent week with a sharp gain today after government readings on inflation and a drop in oil prices eased worries about the effect of rising prices on consumers. The advance lifted the Dow Jones industrial average more than 165 points.

Short-term Treasury prices rose after being pounded earlier this week on fears that the Federal Reserve would be forced to raise interest rates to combat inflation.

The readings arriving today and gains in the dollar supported a notion that the Fed will be able to walk a middle line as it seeks to balance the well-being of a fragile economy and pressures from rising prices. Recent drops in the dollar had contributed to higher oil prices because a weaker dollar makes each barrel more expensive.

According to preliminary calculations, the Dow rose 165.77, or 1.37%, to 12,307.35. Stocks rose moderately yesterday following a steep sell-off Wednesday and began today’s session with steep losses for the week.

Broader stock indicators also rose today. The Standard & Poor’s 500 index advanced 20.16, or 1.50%, to 1,360.03, and the Nasdaq composite index rose 50.15, or 2.09%, to 2,454.50.