Dow soars 64.84 points to new high Falling bond yields fuel broad rally


NEW YORK -- Stocks surged to new highs yesterday as investors large and small braved the market's risks in search of returns no longer available from bank accounts and bonds.

The Dow Jones industrial average rose 64.84 points, or 1.9 percent, to a new high of 3,469.42, more than 28 points above its previous record close.

It was the largest daily gain since September for the Dow, and several other indexes also set new highs. The Standard & Poor's index scored its best daily gain since the end of 1991.

Wherever they looked yesterday, traders and money managers said, they saw reasons to buy stocks.

Foreign markets, in earlier sessions, had advanced sharply, with British stocks also setting a record and Tokyo stocks rising more than 5 percent.

Over the weekend, Congress showed signs of progress in cutting the deficit. Inflation remains low and February's new-job figures were the best monthly showing in four years.

The news events of recent days, however, appeared to merely intensify trends that have been building for months. Since November, bond yields have fallen to their lowest levels in decades, offering investors scant sustenance.

"They are fearful that these low interest rates are here to stay," said Michael Metz, chief investment strategist at Oppenheimer & Co.

Stocks are expensive relative to corporate earnings and dividends. But bond yields stand well below the returns that the managers of many pension funds and other investment pools have promised. Many individuals, seeing much of their income from bonds and money market funds dry up, are also taking their chances with stocks, buying them primarily through mutual funds.

Traders said that yesterday's demand came more from mutual fund managers and other professionals deploying vast sums rather than from individuals calling their brokers or the funds' toll-free numbers.

The market rose throughout the session, finishing just a point below its peak for the day -- evidence of buyers jumping in for fear of missing out.

"There is nothing like higher prices to attract more buyers," Mr. Metz of Oppenheimer said. "In department stores, you mark merchandise down to move it. On Wall Street, you mark it up."

Gainers led losers on the Big Board by nearly 3-to-1. Trading volume, about 278 million shares, was heavy but not frantic.

Companies whose profits depend on the economy's expansion -- including retailers and the makers of machines, chemicals, metals and paper -- were in the market's vanguard yesterday.

NASDAQ stocks, though up strongly, lagged the larger issues. The NASDAQ composite index rose 5.86 points, less than 1 percent, to 687.23 -- more than 21 points shy of a record.

Mutual fund groups reported enthusiastic but not unusually heavy buying of stock funds yesterday, in part a result of the timing of individual retirement account investments during tax payment season.

"Investors are more long-term oriented," said Michael Hines, senior vice president of marketing at Fidelity Investments. "It's just more common to see people making their IRA contributions."

The broader Standard & Poor's 500 index, up 8.6 points, or 1.93 percent, yesterday, to a record 454.71, had its best day since Dec. 30, 1991, when the Federal Reserve aggressively lowered interest rates.

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