Stocks Edge Up on Upbeat Reports

Upbeat economic reports Thursday lifted most stock prices on Wall Street, as investor optimism overcame concerns about surging bond yields.

The dollar also rallied, driving the euro to four-month lows, on news that the German and French economies contracted in the second quarter -- which underlined the relative appeal of the stronger U.S. economy, analysts said.

The Dow Jones industrials added 26.17 points, or 0.3%, to 9,423.68, near the 14-month high reached Tuesday.

The Standard & Poor’s 500 index was up 2.97 points, or 0.3%, at 1,003.27.

As in recent sessions, the strongest segments of the market were technology and small and mid-sized stocks.

The tech-heavy Nasdaq composite index jumped 17.01 points, or 1%, to 1,777.55, a 16-month high.

The S&P; small-cap and mid-cap indexes rose 0.9% and 1.2%, respectively, both reaching 52-week highs.

Positive reports on weekly unemployment-benefit claims, July leading economic indicators and August manufacturing activity in the mid-Atlantic region boosted investor sentiment toward stocks, analysts said.

The reports “make us more confident,” about the market, John Waterman, who manages $18 billion at Rittenhouse Financial in Radnor, Pa., told Bloomberg News. “The economic recovery is happening and will push [corporate] earnings.”

Rising stocks outnumbered losers by 21 to 12 on the New York Stock Exchange and by 21 to 11 on Nasdaq, as trading volume picked up from recent anemic levels.

The stock market’s progress since mid-June had been stalled by rising long-term interest rates, as many bond investors have dumped fixed-income securities, fearing that economic strength would lead to tighter credit.

But Wall Street has rallied briskly over the last two weeks even as bond yields have continued to move higher. The two-year Treasury note yield jumped to an eight-month high of 1.90% on Thursday from 1.80% on Wednesday. The 10-year T-note was at 4.48%, up from 4.44%.

“I’ve been surprised that no matter what -- whether it’s the blackout, bombings overseas or a computer virus -- nothing can keep this [stock] market down,” said Neil Massa, a trader at John Hancock Funds in Boston.

The U.S. market may be attracting foreign capital, especially from Europe, analysts said.

The German and French economies both shrank in the second quarter, data reported this week showed. The U.S. economy, by contrast, grew at a 2.4% real rate.

Concern about the European economy sent the euro down to $1.093 Thursday in New York from $1.112 Wednesday. The euro is at its lowest since April.

In commodity trading, near-term gasoline futures in New York soared 9.5%, their largest gain in more than 12 years, amid concern that refinery shutdowns and higher motorist demand are straining below-normal supplies.

Gasoline for September delivery rose 9.57 cents to $1.099 a gallon, the highest closing price for a near-term contract since March 12.

Among Thursday’s highlights:

* Some retail stocks paced the market’s advance. J.C. Penney jumped $1.53 to $20.12, Kmart gained $1.90 to $26.30, Hot Topic rose 73 cents to $33.65, AutoZone surged $1.94 to $90.55 and Ross Stores was up 95 cents to $48.44.

* Monsanto climbed $1.43 to $24.12 after the developer of genetically engineered crops agreed to settle a lawsuit alleging it dumped polychlorinated biphenyls in Alabama. Solutia, a chemical firm Monsanto spun off in 1997, rocketed $3.10 to $4.

* Semiconductor stocks resumed their climb. National Semiconductor jumped $1.32 to $27.74 and Vitesse gained 20 cents to $6.69.

* In the software sector, Network Associates jumped $1.10 to $13.25, Adobe Systems surged $1.90 to $38.44 and Check Point Software rose 78 cents to $16.78.

* Machinery stocks were strong, including Deere, up $1.45 to $58.06, and Eaton, up $1.63 to $91.08.

* Data from the NYSE showed that shorted shares -- stock borrowed and sold, usually in a bet on falling prices -- declined 4.2% between mid-July and mid-August, to a six-month low of 7.45 billion shares. Purchases by short sellers to close out their bets may have helped stocks rally in recent weeks.