The U.S. stock market advanced to record highs Tuesday for a second straight session, despite another rise in bond yields.
The Dow Jones industrials gained 33.48 points to a record 6,600.66, leading a broad, late-afternoon rally on Wall Street.
The Nasdaq composite index of mostly smaller stocks also closed at a new high, rising 11.33 points to 1,327.73.
The day didn't start out so promising, as the Dow slumped 48 points by late morning in the face of higher bond yields.
Traders said Tuesday's economic data didn't particularly upset bond investors. Rather, many apparently are concerned that Friday's report on December employment will paint a picture of a more-robust-than-expected economy--heralding higher interest rates down the road.
The bellwether 30-year Treasury bond yield rose as high as 6.81% at midday, then eased near the close to finish at 6.79%, still up from 6.77% on Monday and the highest since Oct. 28.
"Someone's taking bets that the news coming in later this week will be negative" for bonds, said David Stahl, senior vice president and manager of $2 billion at New Jersey Manufacturers Insurance.
Sudden weakness in the dollar also hurt bonds, analysts said. The dollar fell versus the Japanese yen for a second day after senior Japanese officials said they're opposed to an excessive additional decline by their currency.
The dollar had reached 117 yen in Tokyo on Monday, but by Tuesday it had pulled back to 115.23 yen in New York. A weaker dollar could make U.S. bonds less attractive to Japanese investors.
Still, by late Tuesday, the stock market seemed nonplused by either bonds or the dollar. In the final tally, winners topped losers by 15 to 10 on the New York Stock Exchange and by 23 to 18 on Nasdaq, in heavy trading.
Analysts said the market is benefiting in part from the usual strong inflow of cash into stock mutual funds early in the year.
"The outlook for this year is maybe 8 to 10% growth [in stock prices]. If we get that, that's not all bad," said Thom Brown, a partner at Rutherford, Brown & Catherwood, with $400 million in assets. "There's not too many attractive alternatives to common stocks."
Among Tuesday's highlights:
* Some of last year's blue-chip leaders hit new highs. Intel jumped 4 1/2 to a record 143 3/8, Procter & Gamble gained 2 to a record 111 1/8 and Coca-Cola zoomed 1 3/4 to a record 54 3/8.
* Many retail stocks rebounded from their recent pummeling on concerns about weak holiday sales. Wal-Mart jumped 1 3/4 to 23 7/8, Dayton Hudson added 1 1/2 to 38 1/8, Gadzooks soared 1 3/4 to 22 1/4 and Mercantile Stores gained 1 3/4 to 48 7/8.
* Some utilities advanced sharply despite higher bond yields. The Dow utility index jumped 2.66 points, or 1.2%, to 233.09.
* Oil services stocks gained as oil prices continued to hover near recent highs. Halliburton rose 1 7/8 to 65, Reading & Bates rocketed 2 1/8 to 29 1/8 and Western Atlas was up 1/2 to 70 5/8.
* American Express surged 2 1/2 to 57 5/8. A single trade of 1 million shares made at the open of the session raised speculation that an investor was amassing shares for a takeover bid.
Market Roundup, D6