Blue Chips Soar 57.10 as Bond Yields Plunge : Markets: Strong corporate earnings reports help ignite the broad advance. DuPont reports 29% quarterly earnings growth.

Stocks shot higher Monday for the second time in three sessions, buoyed by a surprise plunge in long-term interest rates and by healthy corporate earnings reports.

The Dow Jones industrial average soared 57.10 points to 3,705.78, its highest close since March 28. Rising stocks outnumbered losers by more than 2 to 1 on the New York Stock Exchange, although trading was typically slow for a Monday.

In the bond market, a rush of buy orders pulled the yield on the Treasury’s benchmark 30-year bond from 7.22% on Friday to 7.15% by Monday’s close--the lowest since March 31 and well below the peak yield of 7.42% set April 18.

But many traders warned that the frenzy for bonds appeared to be fueled by “technical” factors, not a change in most investors’ expectations about interest rates.

Traders said news that financial markets will be closed Wednesday in memory of former President Richard M. Nixon spurred bond buying on the part of “short” sellers anxious to cover their positions.

In a short sale, a trader borrows bonds and sells them, expecting their prices to drop (and thus their yields to rise) further in the near term. If the bet is correct, the trader can buy bonds later at cheaper prices to replace the borrowed securities previously sold.

Because the government will report on first-quarter gross domestic product Thursday, some short sellers decided to cover their positions Monday by buying bonds, in case first-quarter growth is slower than expected. A weak number could cause interest rates to continue to fall--the opposite bet of bond short sellers.

With an unexpected holiday Wednesday, short sellers suddenly had one less day this week to decide how to approach the GDP report.

Bond pros’ disappointment with Monday’s rally stemmed from the perceived lack of institutional buying. The preponderance of activity by short sellers means that “we did not have quality buyers in the market,” said William Sullivan, economist at Dean Witter Reynolds.

If institutional investors, such as mutual funds, were buying bonds, it could indicate the market’s belief that the recent surge in long-term interest rates has been overdone.

Still, some analysts noted that it’s impossible to measure the precise extent of institutional buying.

A major test of investors’ expectations for interest rates will come today, when the Treasury auctions $17 billion in two-year notes. On Thursday, the Treasury will sell $11 billion in five-year notes.

In the stock market, meanwhile, position covering by short sellers also helped drive prices higher Monday. But Wall Street also appeared genuinely impressed with the latest batch of first-quarter corporate earnings reports.

DuPont, for example, surged 3 1/2 to 58 1/8 after the chemical giant reported that its first-quarter net grew 29%. Other earnings winners included Clark Equipment, up 9 1/8 to 66 5/8, and chewing gum king Wrigley, up 2 1/8 to 52.

“DuPont’s earnings had a big effect on the market,” said Guy Truicko, equity portfolio manager at Unity Management. “They were blowout, and you’re getting a bounce back in cyclical names.”

Though the Dow’s 1.6% gain was far greater than most other stock indexes, analysts noted that the market overall was strong. The Nasdaq composite index of mostly smaller stocks jumped 8.24 points, or 1.1%, to 730.80.

Among Monday’s highlights:

* DuPont’s impressive earnings drew buyers back to industrial stocks. Gainers included GM, up 1 5/8 to 57 1/4; International Paper, up 1 5/8 to 62 5/8; Caterpillar, up 3 1/4 to 111 1/8, and Kennametal, up 1 1/2 to 52 1/8.

* Many tech stocks also surged. Intel gained 2 5/8 to 62 7/8, Apple Computer rose 1 1/4 to 31 and Microsoft surged 2 to 93 3/4.

* Oil stocks leaped as crude prices inched higher. Chevron jumped 2 3/8 to 92 5/8, Mobil gained 1 5/8 to 80 and Unocal surged 1 3/8 to 28 3/8.

* On the downside, U.S. Healthcare slumped 4 1/2 to 38 3/4 after posting first-quarter earnings of 55 cents a share, compared to. 39 cents a year earlier. The results were below expectations.

Overseas, arbitrage-linked selling during the morning session forced Tokyo stocks to end the day lower. The Nikkei average closed down 255.25 points at 19,709.14.

Stocks also closed lower in London, with the FTSE-100 ending at 3,106.1, down 27.6 points. Frankfurt’s DAX index fell 11.7 points to 2,202.22.

In other markets, rising violence in South Africa pushed gold prices up $2.80 to $373.40 an ounce on the Comex in New York. Silver added 6 cents to close at $5.13 an ounce.