NEW YORK -- U.S. stocks rallied yesterday as optimism over " vTC corporate earnings combined with the expiration of futures and options to spark the third-most-active day of trading ever on the New York Stock Exchange.
"Profits are going to be real good next year," said Robert Turner, chief investment officer at $2.1 billion-asset Turner Investment Partners in Berwyn, Pa. "It may be hard to exceed this year's profits, but they'll continue to be solid."
The Dow Jones industrial average climbed 41.72 points, to 3,807.19, its biggest one-day jump since a 44.75-point gain Dec. 2 and its first close above 3,800 since Nov. 18. Shares of Aluminum Co. of America, General Electric Co., United Technologies Corp. and Du Pont Co. led the advance. For the week, the Dow industrials rose 3.1 percent.
Analysts attributed the heavy volume to yesterday's "triple witching" -- when futures and options on U.S. stock indexes and options on individual stocks expire simultaneously. About 483.2 million shares traded hands on the NYSE, above the daily average 303.19 and the most active day since 608.14 million shares traded on Oct. 20, 1987. That was the day after the Dow industrials' biggest one-day loss ever.
In the first hour alone, 212.87 million shares traded, according to Birinyi Associates Inc., breaking the previous record of 184.3 million, set on Sept. 17 last year.
Shares of General Electric Co. gained $1.25, to $50.25, driving its two-week gain to 6.6 percent, after the company said it would raise its quarterly dividend 14 percent, to 41 cents a share, and that it had authorized the repurchase of $5 billion of stock. The move by one of the nation's leading companies gave skittish investors a reason to invest in stocks, traders said.
"Corporate America is definitely going to have to calm some nerves out there, and a move like this does it," said Jim Macko, vice president of trading at McDonald & Co.
Yesterday's gains in stocks was supported by a stable bond market. The yield on the government's 30 1/4 -year bond fell to 7.85 percent, down from 7.86 Thursday.
Among broader market indexes, the Standard & Poor's 500 index gained 3.45, to 458.80, its sixth straight advance. Oil, electrical equipment, beverage and telecommunications issues rose the most. Advancing stocks outpaced decliners by about 13-to-10 on the Big Board.
The Nasdaq combined composite index swung from positive to negative territory before closing down 1.61, at 729.07. Gains in Intel Corp., MCI Communications Corp. and Biomet Inc. gave way to losses in Oracle Systems Corp., Applied Materials Inc. and Amgen Inc.
The Russell 2000 index of small capitalization stocks fell 0.20, to 241.