NEW YORK -- U.S. stocks gained yesterday as the market was able to shrug off rising interest rates and a report suggesting the rate of inflation might be increasing.
The Dow Jones industrial average closed at an all-time high, gaining 13.56, to 3,482.31. The Dow industrials' previous record was 3,478.61, set April 16. The average's advance was led by shares of Chevron Corp. and Aluminum Co. of America.
Standard & Poor's 500-Stock Index rose 0.44, to 444.80, and the Dow Jones transportation average soared 18.93 ,to 1,589.41. The Nasdaq Combined Composite Index lost 1.37, to 681.69.
The American Stock Exchange Market Value Index rose 1.18, to a record 428.43.
"Today's market proves there's still a lot of money out there looking to move into the stock market," Anthony Conroy, head of capital markets at Mabon Securities Inc., said yesterday.
The benchmark 30-year Treasury bond fell 22/32, or $6.88 per $1,000 bond. The yield was up 5 basis points, at 6.86 percent, the highest since 6.92 percent on April 30.
Normally, stocks tumble when long-term interest rates rise this much. "Not today," Mr. Conroy "The only viable explanation is money managers still have a lot of cash, and they're looking to buy stocks."
"People continue to take money out of low-yielding bonds and shift the money into the stock market," said Marshall Front, president of Stein Roe & Farnham Investment Counsel, which manages about $8 billion.
Stocks also got a boost from the Treasury's successful sale of $10.75 billion in 10-year notes. The average yield was 5.96 percent, and the high yield was 5.97 percent. The government completes its quarterly debt sale today when it sells $8.25 billion in 30-year bonds.
Despite a successful auction, interest rates rose on concern about inflation after the Labor Department said producer prices rose an unexpected 0.6 percent in April -- the biggest gain since October 1990 -- as storms drove food costs higher.
Analysts said the stock market was little affected by yesterday's inflation report because the rise in producer prices was weather-related. For example, the government said food supplies were disrupted by widespread stormy weather in March, causing a 44.7 percent surge in vegetable prices last month.
Trading was active on the New York Stock Exchange, as about 255 million shares changed hands.