NEW YORK -- Signs of a stronger economy sparked a rally in stocks yesterday, driving several market averages to new highs.
Orders for durable goods recorded the largest one-month gain since July 1991, and consumer confidence jumped.
"No one is expecting the Federal Reserve to lower interest rates, so good economic news is exactly the right medicine for the stock market," said Barry Berman, head trader at Robert W. Baird & Co.
The Dow Jones industrial average gained 25.66 points, to 3,248.70, led by a rally in International Business Machines, Minnesota Mining & Manufacturing and International Paper. The Dow is now 4.8 percent below its record high, set June 1.
The NASDAQ Combined Composite, the Standard & Poor's 500 and the New York Stock Exchange Composite hit record levels. The NASDAQ composite rose 7.10, to 645.94, breaking the previous high set Feb. 12. The S&P; 500 index gained 2.46, to 427.58, and the NYSE composite rose 1.16, to 235.27, exceeding records set Friday.
Advancing stocks outnumbered declining issues by about 9-to-5 the Big Board. Trading was heavy, with 243 million shares changing hands.
"The chances of an economic recovery increased significantly with the release of the durable goods and consumer confidence reports, and stocks rallied on the news," said Ricky Harrington, of Marion Bass Securities.
The Commerce Department said orders for big-ticket goods rose 3.9 percent in October. The increase was concentrated in new orders for autos, aircraft and military hardware. The Conference Board said its consumer confidence index for November jumped 11 points, to 65.5, the highest level since June.
"The rise in consumer confidence was especially bullish for the stock market," said John Conlon, managing director at Rothschild Inc. "The report means consumers should start spending again, and that's exactly what the economy needs."
Stocks also received a boost from higher-than-expected auto sales inmid-November and stability in the Treasury bond market. Ford Motor Co. and Chrysler Corp. reported big increases in sales, while General Motors Corp. said sales declined in the 10-day selling period. The yield on the 30-year Treasury fell to 7.53 percent, down 1 basis point on the day.
Shares of telephone, health-care, food and computer companies rose the most.
"Investors are looking for opportunities in industry groups that performed the worst in recent months," Mr. Conlon said.
Texas Utilities was the most actively traded stock for a second straight day, closing down 37.5 cents, to $42.375, as 6.9 million shares changed hands. Texas Utilities has attracted investors' interest since the company declared its quarterly dividend and released third-quarter earnings.