NEW YORK -- U.S. stocks surged yesterday, driving the Standard & Poor's 500 and Nasdaq indexes to record highs as investors bet the economy won't slow enough to hamper the growth of corporate profits.
Technology issues paced the advance. Auto and other so-called cyclical stocks also rose after General Motors Corp. and Chrysler Corp. reported higher-than-expected sales for August. The reports eased concern that interest rate increases had stalled the economy and jeopardized this year's stock rally.
The Dow Jones industrial average rose 22.54, to 4,670.08, its third straight gain and the average's highest close since Aug. 9.
The broader S&P; 500 index rose 5.33, to a record 569.17, its seventh gain in the last eight sessions and its biggest rally since a 6.11-point jump on July 12. The index is up 1.8 percent in the last week.
Meanwhile, the technology-laden Nasdaq composite index rose 19.83, to a record 1,039.30, led by Microsoft Corp., Intel Corp. and Oracle Corp. It was the biggest advance in the index since a 23.54-point rise on April 4, 1994, and its third-largest gain ever.
Almost two stocks rose for every one that fell on the New York Stock Exchange, where about 337.1 million shares traded hands. That's about the three-month daily average of 337 million.
Paper stocks advanced because investors are growing more confident the economy will pick up steam later this year and drive demand for paper and the cardboard boxes used to ship goods, said Sherman Chao, a paper analyst at Merrill Lynch & Co. Among the biggest technology gainers today was Xilinx Inc., which surged $5.375, to $48.75. Dell Computer Corp. rallied $5.50, to $80.75, Micron Technology Inc. spurted $5, to $81.375, Microsoft gained $5.125, to $95, and Hewlett-Packard surged $4.75, to $83.125.
Holding back today's advance was concern about interest rates, traders said. Those questions arose after a report that Fed officials will wait until the White House and Congress settle their budget differences before determining whether to cut short-term interest rates. The report cited unidentified Fed officials.