NEW YORK -- Stocks advanced yesterday for the third straight session as lower Treasury bond yields and softer commodity prices signaled easing inflationary pressure.
The inflationary threat is exaggerated, and higher Treasury bond prices reflected that, said Ronald Doran, director of institutional trading at C.L. King & Associates in Albany, N.Y.
"As long as economic data is fairly weak, it will help keep interest rates low, and that will be a cushion for stock prices," he said. "Most economic data in the past week has been weak or lukewarm."
After surging 38.75 points Thursday, the Dow Jones industrial average closed up 6.64 points yesterday, to 3,521.06, below a session high of 3,527.98.
United Technologies Corp., Aluminum Co. of America and Philip Morris Cos. led the advance, offsetting a drop in Woolworth Corp. Philip Morris rose 75 cents, to $49.125, amid speculation that it might spin off its tobacco business and announce a big share buyback and that discounting had won more market share for Marlboro cigarettes.
Advancing common stocks outpaced decliners by a slight margin on the New York Stock Exchange. Trading was moderate, with about 235 million shares changing hands on the Big Board.
Broader market measures were mostly higher. The Nasdaq Combined Composite Index was up 3.10, at 705.81, and the American Stock Exchange Market Value Index added 1.82, to 434.37, but the Standard & Poor's 500-Stock Index was 0.51 point lower, at 448.13.
Bonds rebounded as commodity prices eased, cooling jitters about rising inflation. The Commodity Research Bureau's spot price index rose 0.03 point, to 216.01, after earlier surging to 217.79, its highest since November 1991.
The benchmark 30-year bond was up 1/4 , to yield 6.64 percent, down 1 basis point from Thursday.
"Daily volatility [in stock prices] is being determined by bond prices,"which, in turn, will take their cue from wholesale and consumer inflation figures to be reported next week, Mr. Doran said. After that, investors will focus on second-quarter corporate earnings.
The Labor Department issues the producer price index for June next Tuesday. Economists polled by Bloomberg Business News expect wholesale prices to drop 0.2 percent, after rising 0.2 percent in May.
On Wednesday, consumer prices for June will be reported. They are expected to rise 0.2 percent, compared with a 0.1 percent increase in May.
More broadly, concern centers around the Clinton administration's deficit-reduction package and delayed health-care-reform program. "The upside potential from here isn't great, but cash continues to flow into mutual fund equity areas, which limits the downside," Mr. Doran said.
General Motors, the third-most-active issue on the NYSE, rose 62.5 cents, to $47.50, on volume of 3.3 million shares. Ford Motor Co. gained 87.5 cents, to $52.125, and Chrysler Corp. rose 37.5 cents, to $47.50.