NEW YORK — NEW YORK -- U.S. stocks rose yesterday amid optimism that the economy is growing enough to keep profits healthy through the end of the year. Gains in auto shares overshadowed a slump in technology issues.
A report showing the economy added more jobs than expected last month boosted confidence that consumers will have more money to spend in the last four months of 1995. And signs that the economic growth hasn't caused inflation to accelerate raised the prospect of still-lower interest rates.
The Dow Jones industrial average surged 36.98, to 4,647.54, its biggest one-day advance and highest close since Aug. 14. Shares of General Motors Corp., Boeing Co., AlliedSignal Inc. and Caterpillar Co. -- so-called cyclical stocks because their profits swing with economic cycles -- paced the advance. The 30-stock average ended the week with a 1 percent gain, its first winning week since July 28.
The broader Standard & Poor's 500 index rose 1.96, to 563.84, its sixth gain in the last seven sessions and the index's highest close since July 27. Oil, auto and railroad issues rose, and the gain in rail stock helped propel the Dow Jones transportation average up 11.6, to a record 1,912.49.
Meanwhile, the technology-laden Nasdaq composite index, up 35 percent this year, fell 0.64, to 1,019.47, hurt by shares of semiconductor, software, computer and drug companies.
Among auto issues, shares of GM rose $1.375, to $48.50; Chrysler Corp. climbed 87.5 cents, to $54.625; and Ford Motor Co. jumped 37.5 cents, to $31.125. Auto-parts suppliers Magna International Inc. spurted $1.125, to $45.875; Dana Corp. rallied $1.125, to $31; and Superior Industries International Inc. added 37.5 cents, to $30.125.
Auto stocks gained as investors bet car companies would report their year-over-year sales increased during August. The gains are expected even though the dollar strengthened, which made U.S. autos more expensive abroad. Chrysler confirmed that rosy outlook late in the day when it said vehicle sales rose 4 percent.
More than four stocks rose for every three that fell on the New York Stock Exchange, where about 255.7 million shares traded hands. The lighter-than-usual trading, the lowest in a week, came as many investors abandoned their desks before the three-day Labor Day weekend.
Signs that the economy isn't growing fast enough to cause a higher inflation rate spurred a rally in bonds and helped stocks to extend their gains. The benchmark 30-year bond rose 46.875 cents, driving its yield down 3 basis points to 6.61 percent, the lowest it's been since July 14. When bond yields fall, stock returns become relatively more attractive.
The perception of subdued inflation came from a report by the National Association of Purchasing Management, which said its manufacturing index fell to 46.9 last month from 50.5 in July.
Earlier, the Labor Department said the unemployment rate fell to 5.6 percent from July's 5.7 percent. August's increase of 249,000 new jobs exceeded the Wall Street consensus forecast of a 145,000-job gain. Technology stocks, this year's biggest gainers, fell after a report that mutual fund company Fidelity Investments is trimming its holdings of computer, software and semiconductor stocks. Fidelity's Magellan fund, the country's largest mutual fund, may have cut the percentage of its holdings in technology stocks to 40 percent in July from 44 percent at the end of June.