NEW YORK -- U.S. stocks rose to record highs yesterday, led by banks and other financial issues, as bond yields dropped to 19-month lows.
The Dow Jones industrial average climbed past 4,800 for the first time.
Signs that the economy is growing with little inflation heightened optimism that demand for loans won't dry up and that interest rates have room to fall.
That would expand lenders' profit margins and extend their earnings boom. Over the past month, six of the seven best-performing groups in the Standard & Poor's 500 index have been financial services.
The Dow industrials rallied 36.28 to a record 4,801.80 -- the high for the day and the average's ninth gain in the last 10 days. Shares of J. P. Morgan & Co., General Electric Co., Procter & Gamble Co. and American Express Corp. led the way. The 30-stock average, which is up 4.8 percent in the last three weeks, pushed past 4,000 on Feb. 23 this year.
Among the biggest financial gainers, shares of Citicorp jumped $1.625, to $69.375; First Chicago Corp. rose $1.50, to $68; NBD Bancorp Inc. gained $1.125, to $38.75; and J. P. Morgan rallied $2.125, to $78.25. Also gaining, Federal National Mortgage Association rallied $2.625, to $100.75; Travelers Group Inc. spurted $1.50, to $52.25; and Federal Home Loan Mortgage Corp. rose 25 cents, to $68.125.
The broader S&P; 500 index surged 4.84, to 583.61, just below its high for the day of 583.99. It was the eighth record in a row and its 14th gain in 15 sessions.
The Nasdaq composite index, meanwhile, fell 0.44, to 1,066.96, after reaching a record yesterday and climbing to 1,069.63 at the open. The drop was led by shares of Intel Corp., Microsoft Corp., Apple Computer Inc., Applied Materials Inc. and Oracle Corp.
More than four stocks rose for every three that fell on the New York Stock Exchange, where about 383 million shares traded hands. It was the most active day since Aug. 16, fueled in part by trades linked to tomorrow's "triple witching," when futures and options on U.S. stock indexes and options on individual stocks simultaneously expire.
Among broad market indexes, the Russell 2000 index of small capitalization stocks rose 0.15 to a record 316.12; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, rose 38.99 to a record 5,817.43; the Amex market value index slid 0.36, to 552.77; and the S&P; 400 midcap index rose 0.34. to a
Shares of Apple Computer slumped $2.375, to $40, amid concern that the company won't meet demand for its computers in its fiscal fourth quarter. PaineWebber Inc. analyst Michael Kwatinetz said Wall Street's per-share earnings estimates for the computer company's quarter ended Sept. 30 are too high.
Shares of regional Bell operating companies rose amid expectations that the Federal Communications Commission will change laws to let the companies better compete in providing telecommunications services.
SBC Communications Inc. rose $1.50, to $53.375; BellSouth Corp. jumped $2, to $72; Ameritech Corp. added 62.5 cents, to $51.625; U S West Inc. rose 62.5 cents, to $46.75; and Bell Atlantic Corp. rose $1.625, to $60.375.
One dark spot was retail shares. Circuit City Stores Inc. fell $1.25, to $32.875. Home Depot Inc. slid $1.25, to $38.625; Lowe's Companies Inc. dropped $1, to $31.75; Melville Corp. fell 50 cents, to $34.50; and Consolidated Stores Corp. shed 37.5 cents, to $22.50.
Still, most stocks were able to close at their highs for the day because U.S. bonds surged and yields fell. The benchmark 30-year bond rose 93.75 basis points, or $9.38 per $1,000 bond, driving yields down to 6.45 percent, the lowest since Feb. 16, 1994.