NEW YORK -- U.S. stocks rose yesterday as a takeover bid for Chrysler Corp. lifted auto issues and Boeing Co. shares jumped amid speculation that United Airlines will order about $3 billion worth of Boeing aircraft.
Technology stocks also rallied, pushing the Nasdaq composite index to an all-time high.
Auto shares gained after multibillionaire Kirk Kerkorian and former Chrysler Chairman Lee Iacocca offered $55 a share to buy the 90 percent of Chrysler that Mr. Kerkorian doesn't already own. Chrysler shares rose $9.50, to $48.75, its highest since Jan. 19.
Investors took the bid as evidence auto shares are cheaply priced, analysts said. General Motors Corp. shares rose as much as $1.875 before closing up 12.5 cents, at $44.25. Ford Motor Co. strengthened 87.5 cents, to $27.625, approaching its 52-week high of $29.625.
"News about Chrysler gave everyone a big surprise," said Anthony Conroy, head of global trading at Bankers Trust Investment Management Co.
The Dow Jones industrial average rose 10.73, to 4,197.81, Boeing, United Technologies Corp. and Caterpillar Inc. led the gains. Advancing issues outnumbered declining shares about six-to-five on the New York Stock Exchange.
Shares of Boeing rose $2, to $55.875, reaching a second consecutive 52-week high, after UAL Corp., the holding company for United Airlines, said it plans to replace 94 planes over the next five years. "The presumption is the orders will go to Boeing," which made most of the planes the airline now uses, PaineWebber analyst John Modzelewski said. The analyst said the orders could total around $3 billion.
Shares of United Technologies, which makes jet engines, gained $1.125, to $68.875.
Among broader market measures, the Standard & Poor's 500-stock index rose 1.64, reaching 507.17, its 18th record high this year. Auto, beverage and food shares gained, offsetting losses in electric, telephone and insurance stocks.
Food shares were lifted by gains in H. J. Heinz Co. stock, which rose amid confidence the companies will report steady earnings in an economic slowdown. Bear, Stearns & Co. analyst Laurie Feldman raised her rating to "buy" from "neutral" because of an "improving" profit outlook. Heinz's shares advanced $1, to $41.625. Hershey Foods Corp. finished up 62.5 cents, at $53.
The technology-laden Nasdaq composite index also reached an all-time high, advancing 3.70, to 828.53, as Oracle Systems Corp., Novell Inc. and DSC Communications Corp. gained.
Trading on the Big Board rose to 327.89 million shares from 310.66 million, exceeding the 317.06 million daily average of the past six months.
Technology shares regained their luster late in the day after lagging for most of the session. A report Tuesday showed that orders for computer chips remained strong even though the economy is slowing.
"Earnings are starting to come through, and those companies that meet expectations, investors are going to reward; and those that don't will get very little mercy," said James Engle, chief investment officer at Wood, Struthers & Winthrop Management Co., which manages about $1.6 billion.
Apple's Computer Inc. stock gained $1.25, to $39, amid continued speculation the software company will be acquired. Oracle, for example, had considered buying Apple but is now pursuing software partnerships with the Cupertino, Calif.-based company.
Telephone stocks were pulled down by U.S. West Inc., whose shares dropped 50 cents, to $42.375, after the telephone company sought to split its stock into two issues, one for its domestic telephone business and the other for its cable television operations. Yesterday, Standard & Poor's rating service said it would not raise its rating on the company's debt after the split.
A swing in the bond market knocked stocks off balance earlier in the day, traders said. Government bonds first plunged, then regained most of their lost ground, after a government report showed the prices Americans pay for goods and services rose 0.2 percent.
The results were not enough to ease bond traders' concern about inflation. Yields on the benchmark 30-year government bonds shot up to 7.4 percent from 7.35 percent, then settled back to 7.35 percent.