NEW YORK -- U.S. stocks climbed to record highs for a fourth day amid expectations the economy will slow enough to keep inflation in check and push interest rates lower.
Oil, auto, semiconductor and bank stocks paced the rise, offsetting losses in drug, food and beverage shares.
The optimism was fanned by gains in the bond market and a recent stream of reports, including weaker consumer sentiment and higher April unemployment, that showed the recovery is losing strength.
"Investors feel inflation is not going to run away, and with the combination of earnings and interest rates, it's been very difficult to stop the forward march of equities," said Paul Hennessey, partner at Boston Partners Asset Management, which oversees more than $500 million.
The Dow Jones industrial average rose 6.91, to 4,437.47, its 30th closing high this year. General Motors Corp., Chevron Corp. and Aluminum Co. of America led the advance, outweighing losses in General Electric Co., Coca-Cola Co. and International Paper Co. Yesterday's rise brought the average's gain year to date to 15.73 percent.
The Standard & Poor's 500 index added 2.19, to 527.74, its fourth consecutive record. The Nasdaq composite index rose 4.12, to 863.06, its third successive high. The American Stock Exchange market value index rose 0.55, to a record 488.31, supplanting its old high of 487.89, set on Feb. 2, 1994.
Thirteen stocks advanced for every nine that declined on the New York Stock Exchange. Trading was slower than usual, with about 314 million shares changing hands on the Big Board, compared with 358 million on Friday.
The Russell 2,000 index rose 1.08, to 270.93, still short of its record close of 271.08, set March 18, 1994. The S&P; MidCap 400 index rose 1.35 to a record 189.92, and the Wilshire 5,000 index climbed 21.34, to a record 5,161.40.
Oil stocks were among the day's biggest gainers, as a jump in crude oil, caused by concern that a strike by Venezuelan oil workers would curb supplies, helped oil producers. Chevron rose $1.125, to $48.50; Exxon Corp. gained 62.5 cents, to $70.50; Texaco Inc. rose 50 cents, to $68.50; and Mobil Corp. added 62.5 cents, to $97.875.
Auto stocks were another big winner. General Motors jumped $1.375, to $48, its highest since September 1994. The stock has rallied 15 percent since the beginning of the year but is still down 27 percent from its all-time high, set in February 1994.
Chrysler Corp. stock rose 50 cents, to $44.125, amid expectations the car maker's board will consider a dividend increase when it meets tomorrow, traders said. Ford Motor Co., whose stock rose 87.5 cents, to $29.375, will meet with analysts today and tomorrow. Also today, U.S. Trade Representative Mickey Kantor is scheduled to announce proposed sanctions against Japanese auto imports.
Other beneficiaries of falling interest rates also rallied. Citicorp rose $1.125, to $51, and Merrill Lynch & Co. rose $1, to $48. Deere & Co. leapt $2.625, to $89.75, after S. G. Warburg raised earnings estimates for the tractor maker.
Cyclicals outpaced consumer industries like household products, pharmaceuticals and foods.
Coca-Cola fell $1.125, to $57.875; Gillette Co. slipped 50 cents, to $82.50; Merck & Co. fell 25 cents, to $42.125, and Johnson & Johnson dropped $1.125, to $63.625.
Philip Morris Cos. rebounded from a loss to close up 87.5 cents, at $71.125, after a New Orleans judge agreed to let an appeals court review his decision to grant class-action status in a major lawsuit against the tobacco industry. Some analysts said they expect the class-action certification to be overturned.
Falling bond yields reflected the optimism that this week's economic reports will show inflation won't accelerate and interest rates will fall, traders said.