Stocks rallied in heavy trading Friday as computer-guided buy programs tied to the year's final "triple-witching hour" boosted gains fueled by firm bond prices that came despite fresh signs of economic improvement.
The Dow Jones industrial average, which rebounded 9.22 points Thursday, jumped another 25.43 points to 3751.57 - just 12.86 points short of the all-time high it reached Monday.Dow components IBM, Allied Signal, General Electric and International Paper led the key barometer's advance.
IBM, the Big Board's second-most-active issue, climbed 21/4 to 593/4, while Allied Signal gained 2 to 771/4, GE rose 15/8 to 1051/8 and IP added 15/8 to 677/8.
The New York Stock Exchange composite index added 1.64 to 257.79, while Standard & Poor's 500-stock index climbed 3.04 to 466.38. The price of an average share gained 22 cents.
Advances pounded declines 1,390-669 among the 2,693 issues crossing the NYSE tape.
Adjusted volume surged to 357,031,000 shares - the heaviest in two months - from 283,689,000 shares traded in the same period Thursday.
Volume benefited from program trading tied to "triple-witching hour" - the quarterly expirations of stock-index futures and options and options on individual stocks on the same day.
"Triple-witching hour" often roils the stock market.
Prices ended slightly higher on the American Stock Exchange and modestly higher on the Nasdaq Stock Market.
Treasury securities ended stable with modest gains, while the U.S. dollar finished mixed.
The bellwether 30-year Treasury bond, which slid 2/32 Thursday to yield 6.30 percent, was ahead 6/32 to 99 18/32. The issue's yield, which moves in the opposite direction of its price, was 6.28 percent.
Traders said bonds got a lift Friday morning from a Washington Post article saying a number of senior Federal Reserve officials do not see a need to raise interest rates as a preemptive strike against inflation.
Officials told the Post they believe inflationary pressures remain low enough despite the current economic pickup that the Fed does not need to raise interest rates.
In overseas trading, the Tokyo stock market rallied for the third straight day, while London climbed to record levels for the third time in a row. Frankfurt and Paris also extended their gains.
Heavy futures and options buying lifted London's blue-chip Financial Times 100-stock index another 25.9 points to 3,337.1 - a new all-time high.
On Wall Street, Michael Metz, chief investment strategist at Oppenheimer & Co., attributed most of the market's first solid advance in two weeks to expiration-related computerized buy programs.
But Metz said he thought the advance "signified nothing. Options and futures people dominated the arena."
The analyst added the market got "a little bit of help from firm bond prices. Bonds, as well as stocks, were helped by the Washington Post report that the Feds don't believe there's a need to raise interest rates to combat inflation."
The Post's report came as a steady flow of U.S. economic indicators recently showed the economy strengthening, raising concerns the Fed might need to raise interest rates to curb inflation.
Metz also said IBM represented "the featured stock of the day. People were looking for respectable names with earnings potential."
He also said strong overseas markets served as "a positive for Wall Street."
Yet Gene Seagle, technical research director at Gruntal & Co., considered Friday's session "a nothing day," saying the market's performance had been "distorted by buy programs" related to "triple-witching."
The analyst noted some investors "hugged the sidelines waiting for that monstrosity to get out of the way."
Analysts said Wall Street opened slightly higher, buoyed by a better-than-expected report on housing starts and firm bond prices.
Shortly before the market opened, the Commerce Department reported home construction climbed for the fourth consecutive month during November, advancing to its highest level since February 1990.
Commerce said November housing starts rose 3.9 percent to an annual rate of 1,432,000 units. Economists had expected a 1,402,000-unit annual rate.
The big November increase followed a downwardly revised 0.5 percent October rise, which Commerce had previously estimated as a 2.7 percent gain.
Building permits, a sign of future construction activity, increased 4.8 percent to 1,367,000 units - well above the economists' average estimate of 1,305,000 units.
On the NYSE trading floor, Merry-Go-Round Enterprises paced the Big Board actives, losing another 5/8 to 21/4. The specialty-store chain's stock plunged 54 percent Thursday after a rating downgrade from Alex. Brown & Sons Inc. following news the company had missed payments to many suppliers.
Merck was the third-most-active issue, rising 1/2 to 335/8.
The Amex Market Value Index rose 2.76 to 464.20, while the average price of an Amex share added 7 cents. Advances led declines 339-295 among the 868 issues traded. Volume edged up 19,742,000 shares from 17,231,000 traded Thursday.
Energy Service led the Amex actives, easing 1/16 to 2 15/16.
The Nasdaq composite index climbed 3.70 to 759.23. Advances edged declines 1,191-1,037 among the 3,351 issues traded.
MCI Communications led the Nasdaq actives, rising 1/2 to 261/2.