NEW YORK -- A plunge in long-term interest rates and stronger-than-expected earnings from Kellogg Co., Apple Computer Inc. and Texas Instruments Inc. sent two of the three major U.S. stock measures to record highs yesterday.
The advance was cut short in the final hour by computer-guided sell orders tied to yesterday's expiration of options on Standard & Poor's 100 Index and options on individual stocks, traders said. The late decline wiped out a 21-point gain in the Dow industrials before prices recovered slightly.
The Dow Jones industrial average rose 8.10, to 3,629.73, after soaring as much as 20.68 points. The average, up 44.99 points for the week, sits 0.6 percent below its record closing high of 3,652.09, set Aug. 25.
Among other market indexes, the Standard & Poor's 500 Index soared 2.67, to 469.50, its second successive record. The Nasdaq Combined Composite Index climbed 2.01, to 787.42, its fifth straight record close. The American Stock Exchange Market Value Index advanced 1.58, to a record 483.23.
Stocks opened higher after the Labor Department said consumer prices were unchanged in September, reinforcing the notion -- provided by Thursday's report on producer prices -- that inflation was under control. September marked the fifth straight month that inflation was kept in check.
"The news on inflation has been just about as good as one could hope," said Robert Streed, who manages about $350 million for the Northern Investment Counselors unit of Northern Trust Co.
On the New York Stock Exchange, five stocks gained for every three that fell among common stocks. Boosted by the options expiration, trading was the second most active session this year, with about 366 million shares changing hands on the Big Board, the most since 379.62 million traded Sept. 17.
Stocks were buoyed by a rally in the bond market that sent long-term interest rates to record lows.
The yield on the benchmark 30-year bond slid as low as 5.77 percent after yesterday morning's consumer price report before ending the day at 5.79 percent. That surpassed the previous low of 5.84 percent, set Sept. 8.
The Labor Department reported that consumer prices climbed just 0.1 percent excluding food and energy prices, which tend to fluctuate. Economists polled by Bloomberg had expected a 0.2 percent increase in the CPI, both overall and without food and energy.
"It's a great number," said Barry Berman, head trader at Robert W. Baird. "As long as we have continued slow growth with low inflation, the market will like it."
Adding fuel to the stock market's rally was a series of third-quarter earnings from major companies such as Kellogg, Apple Computer and Texas Instruments that beat investor expectations.
Kellogg soared $3.25, to $56, after the cereal maker's third-quarter earnings of 90 cents a share beat the expectations of analysts.
Food stocks were the best-performing industry group in the S&P; 500 as Kellogg's report fueled gains in other food stocks. General Mills Inc. added $2.125, to $67; Campbell Soup Co. rose $2.25, to $42.375; and Quaker Oats Co. gained $3, to $72.875. H.J. Heinz advanced $1.375, to $39; and Sara Lee Corp. went up $1.625, to $28.
The rise in food stocks reversed a sluggish performance throughout 1993, during which food shares lagged the rest of the market.
The rally also extended a recent recovery in consumer-products stocks that began when analysts at Morgan Stanley and Sanford C. Bernstein this week said Philip Morris Cos. was poised to rise amid a brighter earnings outlook and signs that its flagship Marlboro brand was regaining market share.
Philip Morris closed up 75 cents, at $53.125.
While Kellogg ignited food stocks, Apple Computer and Texas Instruments touched off rallies in computer and semiconductor shares, traders said.
Apple shares vaulted $4.50, to $28.25. The personal computer maker's fourth-quarter earnings fell to 2 cents a share from 81 cents a year ago, yet surpassed the loss of 3 cents projected by analysts. Separately, Apple Chairman John Sculley resigned and was succeeded by Vice Chairman A.C. "Mike" Markkula Jr.
Among other computer shares, International Business Machines Corp. rose $1.875, to $44.50, and Compaq Computer Corp. finished 87.5 cents higher, at $61.75.
In the semiconductor group, Texas Instruments soared $2.875, to $65.875, after that company said third-quarter earnings more than doubled. Net income reached $1.54 a share, up from 58 cents a year ago. Analysts had estimated $1.09 a share, according to Institutional Brokers Estimate System.
Meantime, the rally in cable television shares faltered as the merger mania in the group faded. The mania was ignited by Bell Atlantic Corp.'s $30-billion acquisition of Tele-Communications Inc. announced Wednesday.
TCI Class A stock slipped 87.5 cents, to $32, and Comcast Corp. Class A shares fell $1.50, to $39.125. "Everybody got carried away with the euphoria," said Lance Zipper, head of Nasdaq trading at Kidder, Peabody & Co. "They're not all going to be taken over."
Shares of regional Bell companies gained for the second straight day as Bell Atlantic's merger causes investors to reconsider these stocks as potential growth companies rather than traditional utilities.
GTE Corp. rose 12.5 cents, to $38.75; BellSouth Corp. gained $1.625, to $62.25; U S West Inc. rose 25 cents, to $49.875; and Ameritech Corp. climbed 25 cents, to $87.375.