NEW YORK -- Stocks closed higher yesterday on the fifth anniversary of the 1987 market crash despite continued weakness in Treasury bonds and shares of IBM.
The Dow Jones industrial average rose 14.04 points, to 3,188.45, led by gains in Merck, Caterpillar and Aluminum Co. of America. Computer-driven buy orders helped push the Dow to a session peak of 3,197.64 before prices retreated somewhat.
Standard & Poor's 500 climbed 3.25, to 414.98. The NASDAQ Composite surged 8.06, to 590.67.
Advancers outnumbered decliners by about 9 to 6 among common stocks on the New York Stock Exchange. Trading was the most active it has been in two weeks, with about 221 million shares changing hands on the Big Board.
The Dow extended a recovery that began Friday with the expiration of October stock options, although International Business Machines and Philip Morris again lost ground.
"With the debacles of Philip Morris and IBM, the market continues to hold up," said Richard Ciardullo, director of trading at Eagle Asset Management. "That's got to tell you something."
Namely, more investors have accepted the notion that a presidential victory by Gov. Bill Clinton won't mean disaster for the stock market, and that the budget deficit will swell no matter which party wins.
"Rather than considering a Clinton victory as bad because of the potential for higher interest rates and spending, the attitude now is to get the economy going, regardless of who's elected," said Barry Berman, head trader at Robert W. Baird.
Moreover, so long as interest rates stay relatively low, "there aren't a lot of alternatives" to stocks, Mr. Berman said. "There's also still an outside chance the Fed will cut rates."
British Steel American depositary receipts fell 1/2 , to 10, on reports that James Capel & Co. had placed a block of 17 million shares with institutional investors. British Steel declined to comment.
Novell, up 1 1/8 , to 30 3/4 , continued to rise on speculation that the company might soon announce an agreement to distribute Adobe Systems Inc.'s Carousel document exchange technology.
Philip Morris slipped 1/2 , to 76 3/4 , extending the slump that began Thursday, when the company warned that domestic cigarette sales would fall about 10 percent in the fourth quarter.
IBM, already at a 10-year low, slumped 2 1/8 , to 68 5/8 , as doubts increase over how long the dividend can be maintained.
Merck rose 1 3/4 , to 44 1/4 . Fund managers at J.W. Burns told Barron's magazine that Merck and Bristol-Myers Squibb are their two favorite drug stocks because both companies have a rich pipeline of new products. Merck had fallen Friday after Merrill Lynch removed the stock from its long-term "buy" list.
Bristol-Myers Squibb surged 1 7/8 , to 66 1/4 . Besides the Barron's mention, the stock got a boost from a Lehman Brothers analyst, who said he expects the Food and Drug Administration to approve the company's taxol drug for ovarian cancer by the end of this year.
Blockbuster Entertainment gained 5/8 , to 14 1/2 , after the company reported a 51 percent increase in third-quarter earnings. Separately, Blockbuster announced an agreement to acquire Sound Warehouse and Music Plus chains from Shamrock Holdings of California Inc. for $185 million.
Westinghouse Electric rebounded 5/8 ,to 12 3/8 , after having fallen nearly 20 percent last week on concerns about declining credit quality.