Government reports indicating continued economic strength with little inflation pushed stocks sharply higher in heavy trading Wednesday.
At the close, the Dow Jones industrial average was up 30.95 points at 3,746.29. Stocks' gains were broadly based; advancing issues outnumbered declining ones by about 2 to 1 on the New York Stock Exchange. Volume on the Big Board came to a hefty 355.12 million shares, up from 309.37 million on Tuesday.
In the bond market, yields of Treasury securities were mixed, with investors wondering whether the Federal Reserve Board will raise interest rates again this month or wait until next year.
The Treasury's 30-year long bond ended at 7.86%, up from Tuesday's 7.85%. The bond's price, which moves inversely to yield, fell 3/32 point, or 94 cents per $1,000 invested.
Meanwhile, the Labor Department said consumer prices rose by a relatively modest 0.3% in November. The price index had risen 0.1% in October and 0.2% in September.
At the same time, the Fed reported that industrial production rose by a strong 0.5% in November and pushed the operating rate of U.S. factories, mines and utilities to 84.7% of capacity. It was the highest level of output since April, 1989.
"The inflation reports were not as bad as some investors had worried they might be," said Rao Chalasani, chief investment strategist at Kemper Securities. "They indicate that inflation might not be the problem going forward (that) many had thought."
Still, because of the strong economic data, analysts disagreed as to whether the figures might soon lead the Fed to boost interest rates for a seventh time. Fed policy-makers are to meet Tuesday for the last time this year.
Among the market highlights:
* J.P. Morgan dropped 1 1/8 to 58 after it said its fourth-quarter earnings will be below those of the third quarter due to decreased trading revenues.
* Sprint rose 3/8 to 30 3/4 after it said it plans an alliance with Telefonos de Mexico. Telmex ended 3/8 higher at 51 5/8 in U.S. trading.
* Nike said it plans to buy all outstanding shares of Canstar Sports, the Montreal maker of ice skates and other hockey equipment, for about $395 million. Nike leaped 2 to 68; Canstar surged 6 1/8 to 19 1/8 in Nasdaq trading.
* National Health Laboratories rose 1 1/2 to 13 1/2 on the news that it will merge its U.S. clinical lab operations with those of Hoffmann-La Roche Inc.
* Novell fell 1 3/8 to 15 7/8 in heavy Nasdaq trading after posting a drop in fourth-quarter earnings.
* AT&T rose 1 3/4 to 51. The company received a $1.2-billion contract from Flag Ltd. to build an undersea cable system. In addition, AT&T's chairman gave an upbeat speech to industry executives in New York.
Broad market indexes also finished higher. The NYSE's composite index rose 2.61 points to 248.33, while Standard & Poor's 500-stock index rose 4.82 points to 454.97. The Nasdaq composite index of mostly smaller stocks rose 6.18 points to 725.67.
Stocks ended mostly higher elsewhere. In London, the Financial Times 100-share average surged 34.2 points to close at 2,980.6, while Frankfurt's 30-share DAX average average rose 13.52 points to 2,024.77. In Tokyo, the 225-share Nikkei average gained 56.01 points to end at 18,931.49.
Mexico's Bolsa index closed down 6.44 points at 2401.55.
In other markets:
The dollar was weakened slightly against other major currencies except the Japanese yen, as traders ignored more government data showing strong U.S. economic growth.
In New York, the dollar ended at 100.28 Japanese yen, up from 100.19 on Tuesday, and at 1.569 German marks, down from 1.579.
In commodities trading, coffee futures tumbled in a continued reaction to the U.S. Agriculture Department's global supply forecast. Green arabica coffee for December delivery finished 6.5 cents lower on New York's Coffee, Sugar & Cocoa Exchange at $1.443 a pound, a six-month low.
Market Roundup, D5
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30-year T-Bond: 7.86%
1-year T-Bill: 7.18%