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Stocks Rise, Yields Decline on Price News : Market Overview

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<i> From Times Staff and Wire Reports</i>

* Most U.S. stock indexes closed at record highs, following the bond market rally on news that consumer prices were flat in September. Many stock markets around the globe also hit new highs.

* Breaking new ground, the benchmark 30-year Treasury bond yield finished at 5.79%, down from 5.85% Thursday and the lowest in the bond’s history.

Stocks

Capping a week of merger excitement and falling interest rates, stocks staged a broad rally Friday in very heavy trading.

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The Dow industrials added 8.10 points to 3,629.73, though a midday gain of more than 20 points was clipped by late selling related to expiring options and futures.

Still, most indexes hit new highs, including the Standard & Poor’s 500, up 2.67 points to 469.50, and the Russell 2000 index of smaller stocks, up 0.95 point to 259.98.

Trading volume swelled to 366.1 million shares on the NYSE, the eighth-highest ever. More important, the breadth of the advance was impressive, analysts said: Winners topped losers 12 to 8 on the NYSE and 14 to 10 on Nasdaq.

Investors continue to pour into stock markets worldwide on optimism about subdued inflation and the potential for still lower interest rates, experts say.

Stocks hit all-time highs Friday in a long list of foreign markets, including London, Frankfurt, Amsterdam, Singapore, Stockholm, Brussels, Toronto and Mexico City.

“One of the reasons for our (market’s) strong opening was the extreme strength overseas,” said David Holt, analyst at Wedbush Morgan in Los Angeles.

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Among U.S. market highlights:

* Technology stocks were broadly higher, helped by better-than-expected earnings reports from companies such as Texas Instruments, up 2 7/8 to 65 7/8, and Apple, up 4 1/2 to 28 1/4. Other winners included Hewlett-Packard, up 1 3/4 to 70 1/8; IBM, up 1 7/8 to 44 1/2; Motorola, up 1 5/8 to 106; Creative Technologies, up 2 to 26 1/4; and Sybase, up 2 to 70 1/4.

* Food stocks soared after Kellogg reported that operating earnings rose 11% last quarter. The results suggested that pessimism about earnings growth at food and other consumer products companies may be overdone.

Kellogg jumped 3 1/4 to 56, Quaker Oats leaped 2 3/4 to 72 5/8, General Mills gained 2 1/8 to 67 and Campbell Soup rose 2 1/4 to 42 3/8. Among other consumer issues, Procter & Gamble added 3/4 to 53, Gillette surged 2 1/8 to 62 3/8 and Nike rose 2 1/8 to 48 1/2.

* Cable, telecom and media stocks were mixed, taking a breather after soaring Wednesday and Thursday on news of the Bell Atlantic/Tele-Communications Inc. merger. Bell Atlantic eased 5/8 to 67 and TCI fell 7/8 to 32. Also, Cablevision Systems slid 2 5/8 to 63 and Time Warner lost 1 1/8 to 45 3/8.

But Bellsouth gained 1 5/8 to 62 1/4, US West added 1/4 to 49 7/8, CBS rocketed 13 1/2 to 305 and Multimedia Inc. surged 1 to 39 1/2.

* Electric utility stocks continued to rebound from their recent slide. But banks fell for a second day, despite healthy earnings reports. First Union dropped 2 1/2 to 41 1/2, Chemical Bank lost 1 5/8 to 43 1/2 and Citicorp dropped 1 to 37 3/8.

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Other Markets

The government’s report of no consumer inflation in September sparked another frenzy for long-term bonds, on the assumption that low inflation means long-term interest rates may continue to fall.

The yield on the 30-year Treasury bond closed at 5.79%, down from Thursday’s 5.85% and the lowest since the Treasury began selling 30-year bonds in 1977.

Once again, shorter-term yields failed to decline as sharply as the 30-year, which traders said demonstrated in part the highly speculative nature of the 30-year issue.

The yield on three-year T-notes, for example, eased to 4.03%, off just 0.01 point from Thursday.

In other markets:

* Oil retreated in a breakdown attributed to lessening tensions with Iraq. Light, sweet crude for November fell 23 cents to $18.27 a barrel on the New York Merc.

* Gold and silver held up well, given the favorable inflation report. On the New York Comex, near-term gold eased just 40 cents to $364.90 an ounce; silver added 0.7 cent to $4.34.

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Market Roundup, D4

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