NEW YORK -- U.S. stocks climbed yesterday for a second day as optimism about brisk holiday and home sales offset concern that interest rates will rise and lure money into higher yielding bonds.
"For everybody who's stopped buying because interest rates are going up, there's someone who's buying until they stop his credit card," said George Jacobsen, chief investment officer of Trevor Stewart Burton & Jacobsen Inc.
On Friday, the industrial average rallied 33.64 points, its first advance since Nov. 16 and its biggest one-day gain since Oct. 28's 55.51-point jump. But many traders downplayed the rally's importance, pointing out that volume on the day after the Thanksgiving holiday was less than half the recent daily average.
Broader market indexes also advanced for a second day. The Standard & Poor's 500 index rose 1.87, to 454.16, extending Friday's 2.36-point advance. Oil, electrical equipment and drug shares rose, while telephone and bank shares fell.
The Nasdaq combined composite index gained 3.21, to 745.73, after jumping 4.84 on Friday. Last week, the Nasdaq dropped 2.9 percent, its biggest decline since June 24.
Eleven stocks rose for every 10 that declined on the New York Stock Exchange. Trading was moderate, with about 265 million shares changing hands on the Big Board.
The Russell 2000 index rose 0.66 to 242.69, the American Stock Exchange market value index fell 1.10 to 433.59, and the Wilshire 5000 Index added 13.74 to 4,486.03.
Disney shares added $1.50, to $44.50, after the company said its film "The Santa Clause" was the Thanksgiving weekend's top performer.
Specialty retailers and apparel makers were another bright spot, with Home Depot Inc. rising $1.125, to $46.75; Toys 'R' Us Inc. up 37.5 cents, to $37.375; Limited Inc. up 75 cents, to $20.125; Gap Inc. up 25 cents, to $36; Jones Apparel Group Inc. up 25 cents, to $25; and Nordstrom Inc. up 62.5 cents, to $46.25.
The benchmark 30-year Treasury bond yield climbed as high as 8.01 percent yesterday, up 8 basis points from late Friday and 224 basis points from a record low of 5.77 percent in October 1993. The yield ended at 7.98 percent.
Host Marriott Corp., Intel Corp., Cisco Systems Inc., Telefonos de Mexico series L American depositary receipts and RJR Nabisco Holdings Corp. were the most actively traded U.S. stocks.
Host Marriott fell $1, to $8.50, after two trades of 2.8 million shares and 1.4 million shares crossed by Salomon Bros. Inc., traders said. Host Marriott officials weren't available for comment on the trades.
Bank stocks were among the biggest decliners yesterday amid concern that rising interest rates will shrink banks' profits and the value of their securities investments. NationsBank Corp. fell 62.5 cents, to $45.125; Norwest Corp. fell 87.5 cents, to $22.375; First Interstate Bancorp shed $1.25, to $71.50; and Wells Fargo & Co. dropped $1.75, to $147.25.