NEW YORK -- Stocks rose yesterday after Philip Morris Co. raised cigarette prices and reports indicated that orders for paper products strengthened in October.
The Dow Jones industrial average gained 22.08 points, to 3,684.51, with shares of Philip Morris and International Paper Co. accounting for more than one-third of the gain. Computer-driven buy orders added to the Dow's advance. For the week, the Dow rose 41.08 points.
The Standard & Poor's 500 Index rose 2.75, to 465.39. Advancing stocks exceeded declining issues by a margin of about 7-to-5 on the New York Stock Exchange. Trading was active, with about 326 million shares changing hands.
The Nasdaq Combined Composite Index gained 0.34, to 779.32. The American Stock Exchange Market Value Index rose 1.62, to 479.69.
Philip Morris rallied $2.25, to $59, on heavy trading of 5.7 million shares. The company told distributors that it would raise prices on most of its cigarettes by about 4 cents a pack, after similar moves by rivals this week.
"The stock market was led by stocks, like those in the tobacco sector, which have lagged this year," said Thomas Stevens, chief investment officer at Wilshire Asset Management, which manages about $9 billion in investments. "Investors are looking for value, and that's leading them to consumer brand stocks."
Paper stocks rose after reports that shipments for liner-board products increased in October. The S&P; Paper and Forest Products Index soared 29.18 points, or 3.3 percent, to 926.13.
International Paper Co. rose $1.50, to $65.875; Federal Paper Board Co. gained $1, to $23.375; Temple-Inland Inc. added $4.375, to $50.125; Stone Container Corp. soared $1.375, to $10.125; Weyerhaeuser Co. climbed $1, to $44.375; and Georgia-Pacific Corp. rose $3.625, to $73.875.
Orders were strong last month, as indicated by the 180,000-ton decline in liner-board and containerboard inventories, said Bruce Kirk, an analyst at S.G. Warburg & Co. A month of big orders, he said, suggests that the recent price rise will stick.
Mr. Kirk said he expected prices for corrugated container products to rise between 2 percent and 4 percent in January. In addition, he said, liner-board prices should rise $25 a ton in January, from the current $308.
The stock market was helped yesterday by a rally in Treasury bonds. The 30-year Treasury bond rose 31/32, to 101 13/32, to yield 6.14 percent. Bond prices rose on reports that the University of Michigan's consumer confidence index fell in November to the lowest level in two months. Economists had estimated that consumer confidence rose in the latest one-month period.
"Rates are down today, and that's giving the stock market a mild boost," said Don Hays, investment strategist at Wheat First Butcher & Singer Inc. As rates fall, investors tend to pursue higher returns by moving money out of fixed-income securities and into the stock market.
RJR Nabisco Holdings Corp., Dun & Bradstreet Corp., Checkers Drive-In Restaurant Inc., American Barrick Resources Corp. and Telefonos de Mexico S.A. were the five most actively traded stocks.
The strength in Philip Morris' stock spilled over into other tobacco issues. RJR Nabisco rose 37.5 cents, to $7.25, on volume of 10.6 million shares. RJR Nabisco's stock has risen 24 percent in the past two weeks on optimism about higher cigarette prices. UST Inc. rose $1.50, to $27.50. American Brands Inc. increased $1, to $35.375, after the company raised cigarette prices.
Telefonos de Mexico rose $1.875, to $55.50, on hopes that the North American Free Trade Agreement will be ratified.
Shares of some retail stocks rose after the Commerce Department reported that retail sales increased 1.5 percent in October, the largest gain in six months. Analysts had forecast that sales increased 1.2 percent last month.
Sears, Roebuck and Co. rose 12.5 cents, to $56.625; Dillard Department Stores Inc. advanced $1.875, to $39.50; Dayton-Hudson Corp. gained 12.5 cents, to $72; and Nordstrom Inc. rose 12.5 cents, to $35.375.
Checkers Drive-In Restaurants gained 87.5 cents, to $14, on rumors that the restaurant chain had received a buyout offer from PepsiCo Inc.
Shares of Best Buy Co. and Circuit City Stores Inc., two electronic retailers, fell on concern about price wars in the 55 markets in which the two companies compete.
Best Buy declined $4.875, to $49.625, and Circuit City fell $1.125, to $26.