NEW YORK — NEW YORK -- U.S. stocks rose to records yesterday as chemical, paper and auto companies rallied on expectations that profit growth will accelerate in the second half of this year.
The Dow Jones industrial average rose 33.23 to a record 5,304.98, its first time above 5,300 and its fourth high in six sessions. Caterpillar Inc., International Business Machines Corp. and General Motors Corp. paced the gains.
The Standard & Poor's 500 index gained 2.60, to 624.22, surpassing its record 621.69 Dec. 13.
The Nasdaq composite index rose 1.54, to 1,042.50, helped by MCI Communications Corp., the most actively traded stock on U.S. exchanges.
MCI and Microsoft Corp. said they will team to market and develop services for the burgeoning on-line and Internet markets. MCI shares gained $1.75, to $29.25, and Microsoft was down 12 1/2 cents at $90.375.
Some 1,319 stocks rose and 970 fell on the New York Stock Exchange.
The Russell 2,000 index of small companies climbed 0.60, to 311.82; the American Stock Exchange market value index added 2.42, to reach 547.66; and the Wilshire 5,000 index jumped 20.83, to 6,105.96.
Some 363 million shares changed hands.
Investors bought shares of paper, chemical and auto companies, whose earnings are closely tied to swings in the economy, betting that the Federal Reserve will cut borrowing rates and give the economy a boost. The Federal Reserve's policy committee meets today and tomorrow to consider lowering rates.
The Morgan Stanley cyclical index of 30 stocks jumped 2.99, or 0.9 percent, to 344.83, and its consumer product index rose 0.53, or 0.2 percent, to 291.07.
Caterpillar rose $1.50, to $63.75, and DuPont added $1 to reach $75.125.
Stocks pared early gains as bond yields rose, then recovered later in the day. Yields on benchmark 30-year Treasury bonds rose to 6.09 percent yesterday from 6.04 percent Friday amid doubts that Fed policy-makers would lower rates this week or wait until their next meeting in March.
Drug issues also helped fuel gains. Merck shares jumped $1.125 $69 after the company said a study showed its experimental drug Crixivan reduced the virus that causes AIDS to undetectable levels. The stock is up 4.2 percent since it reported better-than-expected earnings last Tuesday.
Rhone-Poulenc Rorer Inc. said it expects profits to rise to 10 percent in 1996 after falling 3 percent last year. Its stock jumped $4.25, to $59.50. Johnson & Johnson rose $1, to $94.25.
Companies reporting fourth-quarter profits posted mixed results. Nabisco Holdings rose $1.125, to $34.625. The prospect of new product launches and expanding international sales outweighed the company's 2.5 percent profit decrease last quarter.
Tyson Foods' Class A shares dropped 87.5 cents to $24 after the poultry processor reported its fiscal first-quarter earnings fell 17 percent.