NEW YORK -- U.S. stocks rose yesterday for a third day amid expectations of strong fourth-quarter earnings from companies such as General Motors Corp. and Amgen Inc.
Autos, drugs, beverages and airlines were the biggest gainers.
"It's going to be a dynamite fourth quarter," said Richard Ciardullo, head trader at Eagle Asset Institutional. "The year-end rally has started."
A round of computer-guided "sell" orders valued at about $46 million pared the market's gains minutes before the close. The sell orders were most likely tied to the unwinding of so-called "flex" options on the Standard & Poor's 500 index, said Jeffrey Rubin, an analyst at Birinyi Associates Inc. in Greenwich, Conn.
The Dow Jones industrial average, which rose as much as 31.97, to 3,846.89, closed up 18.51, at 3,833.43. General Motors Corp., up $2.125, to $41.25, led the rise, followed by International Paper Co. and J.P. Morgan & Co. On Thursday, the average rose 13.12, extending Wednesday's 34.65-point rally.
For the week, the Dow industrials rose 26.24, or 0.69 percent.
GM climbed for a second day as Donaldson, Lufkin & Jenrette raised its fourth-quarter earnings estimate. The automaker also led the rise in the S&P; 500 index. The S&P; 500 index closed up 0.15, at 459.83, after rising as much as 1.64.
A surge in Delta Air Lines Inc. sent the Dow Jones transportation average up 24.69, to 1,434.54. Delta soared $3.875, to $49.625, after a federal judge ruled the carrier wasn't responsible for the 1991 demise of Pan Am World Airways, sparing Delta from a potential $2.5 billion judgment. Salomon Bros. Inc. raised its rating of Delta after the judgment.
Other airline stocks rallied along with Delta. AMR Corp., parent of American Airlines, gained $2, to $53, and UAL Corp., the holding company for United Airlines, leapt $3.50, to $89.50.
The Nasdaq combined composite index climbed 2.85, to 742.19, its fourth straight advance, as Tele-Communications Inc. and Amgen Inc. advanced.
Amgen jumped $2.50, to $58.5625, amid expectations of strong fourth-quarter sales of the company's Neupogen drug for cancer patients undergoing chemotherapy. Rising Neupogen sales will push Amgen's earnings up 33 percent in the fourth quarter, said Larry Smith, an analyst at Hambrecht & Quist, who raised his rating of Amgen to "buy" from "hold" yesterday.
The Russell 2000 index rose 1.12, to 244.73; the American Stock Exchange market value index climbed 1.26, to 428.78; and the Wilshire 5000 index gained 7.33, to 4,527.30.
The number of declining stocks was roughly even with advancers on the New York Stock Exchange. Trading was slow before the three-day Christmas weekend, with about 197 million shares changing hands on the Big Board. That was the fewest since 114.55 million shares traded the Friday after Thanksgiving.
GM rose after DLJ analyst Wendy Needham raised her fourth-quarter earnings estimate to $1.45 a share from $1. The Wall Street Journal reported that GM may abandon some traditional models such as Cadillac Fleetwood and Buick Roadmaster to devote space to more profitable pickup truck and sport vehicles. Ford Motor Co. added 25 cents, to $27, and Chrysler Corp. rose 75 cents, to $48.875.
Bank stocks, which slid Thursday on concern that Mexico's devaluation of the peso might hurt profits, rebounded. Citicorp rose 25 cents, to $41.50; National Westminster Bank Plc American depositary receipts added 25 cents, to $47.50; and Bankers Trust New York Corp. increased 25 cents, to $56.875.
Signs of stability in Mexico buoyed sentiment yesterday, traders said. The bolsa index climbed 35.59, to 2,341.85 yesterday.
Benchmark Telefonos de Mexico's American depositary receipts closed unchanged, at $40.625, in New York after plunging $7.875 this week.
Other shares tied to Mexico fell. Mexico Fund fell 50 cents, to $23.25, and Latin American Discovery Fund plunged $4.25, to $17.75.