Stocks posted solid gains Thursday for a third straight session, helped by another rally in bonds.
The dollar finished mixed, however, rising against the Japanese yen but losing ground against the German mark despite a surprisingly good U.S. trade report.
On Wall Street, the Dow industrials gained 26.09 points to 3,758.98, pacing a broad rally. Winners outnumbered losers by nearly 3 to 2 on the Big Board.
Investors continued to snap up stocks of companies whose businesses would be helped by a continuing economic recovery. Many of those shares had tumbled in recent weeks, as rising interest rates sparked fears of a pronounced slowdown in the economy.
Those worries dissipated significantly on Tuesday, when the Federal Reserve Board signaled that it is finished raising rates for now.
Technology stocks, also sensitive to the economy, were big winners as well Thursday. Their gains helped boost the Nasdaq composite index 5.41 points to 727.31, the highest in two weeks.
In the bond market, yields finished lower across the board, even as commodity prices jumped again. The 30-year Treasury bond yield dipped to 7.23% from 7.27% on Wednesday. The bond's yield peaked at 7.65% on May 9.
Some bond traders said investors were wary of bonds early in the day, after the government reported that the nation's March trade deficit narrowed unexpectedly to $7.46 billion, thanks to record exports. That raised concerns about faster economic growth leading to higher inflation.
But the trade report also helped the dollar rally against the yen, which may have encouraged Japanese investors to buy U.S. bonds later in the day, analysts said.
In addition, there were rumors of buying of intermediate-term bonds by major central banks.
The dollar, which jumped to 104.25 yen in New York from 103.50 on Wednesday, was also supported by statements from U.S. Trade Representative Mickey Kantor. He expressed hope that preliminary discussions with Japanese officials will lead to a full resumption of the stalled "framework" talks on reducing Japan's huge trade surplus.
The dollar failed to rally against the German mark, however. It closed at 1.654 marks, compared to 1.656 on Wednesday.
Some Wall Streeters said the big surprise Thursday was that the bond market ignored another jump in commodity prices. A surge in coffee, cocoa, cotton and oil futures drove the Commodity Research Bureau index of 21 key commodities up 1.45 points to 232.43, the highest level since October, 1990.
Crude oil futures gained 46 cents to $18.45 a barrel on the New York Merc, near a seven-month high, on talk of tightening supplies.
Among Thursday's stock market highlights:
* Industrial stocks leading the market higher included DuPont, up 1 to 61 1/4; GM, up 1 1/8 to 55 1/4; International Paper, up 1 7/8 to 68 3/8; Georgia-Pacific, up 3 3/8 to 63 1/2; Varity, up 3/4 to 36 3/4, and Nucor, up 2 1/8 to 64 5/8.
* Transport issues also advanced again, on news that Kansas City Southern is trying to sell its rail business for as much as $2 billion. Kansas City rose 2 1/2 to 45 1/2 and other rail stocks climbed as well. CSX jumped 3 3/8 to 76 and Burlington Northern gained 1 7/8 to 57 3/8.
Kansas City said it wants to concentrate on its financial services businesses. The firm announced that it will increase its stake in the Denver-based Berger mutual fund firm to 80% from 18%, buying most of the additional shares from founder Bill Berger. Kansas City also owns an 81% stake in the Janus mutual fund firm.
* In the technology and telecommunications arena, AT&T; jumped 1 3/8 to 56 5/8 and General Instrument leaped 4 1/4 to 59 1/8 after Bell Atlantic picked them to furnish a new network system. Bell Atlantic was up 1/8 to 53 7/8.
On the downside, DSC Communications plunged 8 11/16 to 49 1/16 because it failed to get a piece of the Bell Atlantic contract.
Other tech gainers included Apple, up 1 1/2 to 32 1/8; Compaq, up 2 1/2 to 111 5/8; Motorola, up 1 to 47 1/8, and Tellabs, up 1 7/8 to 71 1/8.
* Among energy issues gaining from higher oil prices, Mobil rose 1 3/8 to 82 3/4, Chevron added 1 1/4 to 87 3/4 and Unocal was up 1 to 27 7/8.
Overseas, Frankfurt's DAX index fell 19.65 points to 2,247.76, while London's FTSE-100 index gained 6.3 points to 3,122.8.
In Tokyo, the Nikkei index gained 68.61 points to 20,221.34.
The hot foreign action continued to be in emerging markets. In Mexico City, the Bolsa index jumped 29.73 points to 2,404.91.
Market Roundup, D6