Late Rally Pushes Dow Ahead 11.53

Market Overview

* Stocks rallied late Wednesday, pushing some key market indexes to new highs, as optimism about the economy overcame fears about higher interest rates.

* The bond market stabilized after Tuesday’s surge in interest rates. The Treasury announced plans to raise $40 billion via new bond sales next week, as expected.

Stocks

The market dragged for much of the day before a late buying wave assured a higher close.

The Dow industrials added 11.53 points to 3,975.54, just short of Monday’s record high of 3,978.36.

Meanwhile, some broader indexes hit new highs: The Standard & Poor’s 500 gained 2.38 points to a record 482.00, and the New York Stock Exchange composite rose 1.27 points to a record 267.71.

Winners topped losers 13 to 8 on the NYSE, though they were nearly even on the Nasdaq market.

Analysts noted that investors once again seemed to be taking their cue from positive economic reports. Home builders’ stocks, for example, shot up after the government said new home sales rose a strong 11.4% in December.

Also, the government said that the index of leading economic indicators rose 0.7% in December, pointing toward continued economic expansion.

With corporate profits rising and the strong economy suggesting more gains ahead, Stocks are “still the only game in town,” said David Holt, analyst at Wedbush Morgan Securities in Los Angeles.

Among the market highlights:

* Builders’ stocks surging included Pulte, up 2 3/4 to 38 5/8; Kaufman & Broad, up 7/8 to 23 7/8 and Ryland, up 1 1/8 to 25 1/4.

* Many industrial stocks responded to the leading-indicators report. Gainers included Emerson Electric, up 2 1/8 to 63 5/8; Inland Steel, up 1 3/8 to 35 3/4; Tenneco, up 1 3/4 to 57 3/4; Dover, up 1 1/4 to 61 1/8; and Fluor, up 1 3/4 to 46 1/4.

* Oil stocks jumped, catching up with the recent rebound in oil. Mobil gained 1 to 81 1/8, Phillips rose 7/8 to 31, Texaco added 1 1/4 to 67 3/4 and Amoco was up 7/8 to 54 3/4.

* Technology stocks also were strong. Oracle soared 1 3/8 to 33 1/8, Symantec gained 1 7/8 to 15 3/8 and Compaq jumped 2 1/8 to 87 3/4.

* Among companies responding to earnings reports, phone firm Sprint surged 1 5/8 to 37 1/8 on a positive report. But Polaroid tumbled 1 3/8 to 33 5/8 on its report.

* Thousand Oaks-based biotech giant Amgen sank 3 to 44 after reporting quarterly operating earnings per share up 14%. The company also said it was comfortable with analysts’ estimates of $2.85 to $2.95 a share for 1994, versus $2.48 a share from operations in 1993. At least two brokerages downgraded the stock, citing slower-than-expected drug sales.

* Sears tumbled 2 1/2 to 51 1/4. Some analysts cut earnings estimates, citing expected losses in Sears’ Allstate unit because of the Northridge earthquake.

Overseas, stocks ended mixed. London’s FTSE-100 index rose 38.8 points to a record high of 3,520.3. Paris’ CAC-40 index also hit a record, up 24.64 points to 2,355.93.

But Tokyo’s Nikkei-225 index shed 166.31 points to 20,250.03, and Mexico City’s Bolsa slipped 2.42 points to 2,784.90.

Other Markets

Interest rates were mostly flat, stabilizing after jumping Tuesday on worries about the strong economy fanning inflation. The Treasury’s 30-year bond yield eased to 6.28% from 6.31% on Tuesday.

The Treasury announced, as expected, that it will raise $40 billion via auctions of 3-year, 10-year and 30-year bonds next week.

Many traders appear to be biding their time ahead of Friday’s January employment report. Some fear that a greater-than-estimated rise in jobs in January could force the Federal Reserve to tighten credit for the first time since 1989, to keep the economy from over-heating.

The Fed’s policy-making committee meets today and Friday in a regularly scheduled session.

Elsewhere:

* Gold added 60 cents to $384.70 an ounce on the New York Comex. Silver continued higher for a second day, rising 5.6 cents to $5.34.

* Heating oil leaped to a three-month high on the New York Merc as winter’s persistent chill drew down fuel supplies. Crude oil futures prices also gained again, up 12 cents to $16.04 a barrel.