NEW YORK -- U.S. stocks closed mixed yesterday, as the Dow Jones industrial average soared to a record high and the Nasdaq Stock Market index lost ground amid signs that the economy was gaining strength.
Two economic reports released yesterday -- home resales for September and domestic auto sales for mid-October -- exceeded analysts' expectations.
"The reports got the cyclicals in the Dow doing better," said Philip Smyth, an analyst at Birinyi Associates Inc., a research firm that tracks stock market activity. So-called "cyclical" companies rely on a strong economy for profits.
The Dow industrials climbed 24.31 to a record 3,673.61, shattering the previous record of 3,652.09 set on Aug. 25. The rise was led by United Technologies Ltd., McDonald's Corp., Aluminum Co. of America, AlliedSignal Inc., and Chevron Inc. The average, which had fallen as many as 4.20 points earlier in the day, racked up most of its gains toward the end of the session.
Broader market indexes were mixed, finishing below all-time closing highs reached on Oct. 15. The Standard & Poor's 500 closed up 0.93 at 464.20, trailing its record close of 469.50.
The Nasdaq Combined Composite Index slid 2.93 to 769.75, lagging its record close of 787.42, amid declines in DSC Communications Corp. and Lotus Development Corp. The American Stock Exchange Market Value Index fell 1.67 to 475.58, ending below its record closing high of 483.23.
The Dow industrials got a boost from a report released yesterday morning that showed a bigger-than-expected rise in September home resales, traders said.
The National Association of Realtors said resales last month rose 2.6 percent to an annual rate of 3.91 million, exceeding the 3.84 million pace predicted by economists polled by Bloomberg Business News. In August, home resales ran at a 3.81 million pace.
Evidence of a more robust recovery was reinforced in the afternoon, when the nation's auto manufacturers said car sales in the mid-October selling period ran at an annualized rate of 7.7 million, surpassing the rate of 6.8 million estimated by economists.
"Automobile sales certainly bolstered" the perception of an improving economy, said Edward Collins, executive vice president of institutional trading at Daiwa Securities America.
The economic reports pushed Treasury bond yields higher on the notion that a stronger economy might produce a higher rate of inflation, which diminishes the value of fixed-rate securities.
The 30-year bond yield rose above 6 percent for the first time since Oct. 8. The yield was at 6.01 percent, up from 5.98 percent late Friday. The record low yield of 5.77 percent was set Oct. 15.
For the components of the Dow industrials, however, signs of a faster economic recovery outweighed any concern about the rise in interest rates, Birinyi Associates' Mr. Smyth said.
On the New York Stock Exchange, eight stocks fell for every seven that rose. Trading was active, with 260 million shares changing hands on the Big Board.
Within the Dow industrials, gains in United Technologies and Alcoa offset declines in General Motors Corp. and J. P. Morgan & Co.
United Technologies rose $2.50, to $64.25, after the company's Sikorsky Aircraft division received a $126 million contract from the German government to make helicopter rotor blades.
GM stock closed down $1.25, at $44.75, amid concern that a tentative agreement on a new three-year contract reached with the United Auto Workers over the weekend won't rein in the automaker's pension and health-care expenses. The pact, similar to ones reached with Ford Motor Co. and Chrysler Corp., is to Ford's advantage, not GM's, said Jim Benning, a trader at BT Brokerage. "GM has an older work force than Ford's."
A PaineWebber Inc. analyst lowered his investment rating on GM stock to "neutral" from "attractive." GM stock dropped as much as $2.375, to $43.625, before the automaker's report of a 20 percent surge in domestic mid-October car sales trimmed the stock's loss.
Among other Dow components, Exxon Corp. gained $1, to $65.625, after the oil giant's third-quarter earnings beat analysts' expectations. Profit, excluding one-time items, rose to 84 cents a share from 80 cents a year ago, beating estimates of 78 cents published by Zacks Investment Research.
Automobiles, electric utilities, and semiconductors were down the most in the S&P; 500. Electric utilities fell because rising interest rates make the above-average dividends of utilities less attractive.
The Dow Jones utilities average, which moves inversely to interest rates, closed down 1.85, to 238.66. The average is sometimes considered a harbinger of movements in bonds.
"Bonds are under some pressure, and the utilities average is under more pressure," said John Blair, head trader at NatWest Securities Inc. "People feel the easy money's been made, and rates are closer to a bottom than a top."