Stocks rally, led by tech shares

Continued strength in technology shares helped give the stock market its fifth advance in six sessions Monday.

Oil prices sagged anew, which also helped stocks.

The tech-heavy Nasdaq composite index jumped 16.66 points, or 0.7%, to 2,406.38, its highest close in more than five years.

The Dow Jones industrial average rose 23.45 points, or 0.2%, to 12,131.88.

The Dow is up 13.2% year to date. The Nasdaq is up 9.1%.

“There is a tremendous amount of momentum built into the market,” said Steven Goldman, chief strategist for Weeden & Co., noting that broad market indexes have risen with few interruptions since late September.

Recent gains in tech shares including Cisco Systems, Dell and Apple Computer are a sign of optimism about the economy, many analysts say.

Federal Reserve Bank of Dallas President Richard Fisher, speaking in San Antonio on Monday, gave an upbeat assessment of the U.S. economy, saying it was expanding “forcefully.”

Some bullish investors are betting that the economy will continue to grow but that inflation worries will ebb, allowing the Fed to hold interest rates steady or begin cutting them.

Reports this week on consumer and wholesale inflation in October are expected to show modest increases in “core” prices, meaning those excluding food and energy.

One driver of inflation -- crude oil -- has tumbled since mid-July and since late September mostly has traded between $57 and $61 a barrel. Near-term futures fell $1.01 to $58.58 on Monday in New York.

The action in the Treasury bond market also has suggested waning inflation concerns. The yield on the 10-year T-note reached 4.61% on Monday, up from 4.59% on Friday but holding near the seven-month low of 4.54% set Sept. 25.

In other trading, the dollar rebounded somewhat after sagging last week against the euro, following the Democratic party’s victory in the congressional elections. Some analysts expressed concern that Democratic control of the House and Senate might lead to protectionist legislation that could hamper trade and cause foreign investors to flee dollar-denominated assets.

The euro, which hit a two-month high of $1.285 on Friday, slipped to $1.281 on Monday.

The dollar rose to 118.12 yen from 117.62 on Friday.

But early today the dollar fell back to 117.64 yen after the Japanese government said the nation’s economy expanded at a faster-than-expected annualized pace of 2% in the third quarter. Analysts had expected growth at a 1% rate.

Among the day’s market highlights:

* The Standard & Poor’s 500 index climbed 3.25 points, or 0.3%, to 1,384.42, and is up 10.9% this year.

Winners edged losers by 6 to 5 on the New York Stock Exchange in relatively light trading.

* Computer chip maker Intel bolstered Nasdaq, gaining 42 cents, or 2%, to $21. Citigroup’s brokerage arm added the stock to its recommended list and said chip stocks in general were attractive.

“The group could begin to outperform and move up more meaningfully next year,” said the brokerage’s chief U.S. equity strategist, Tobias Levkovich.

Among other tech issues, Dell jumped 60 cents to $25.49 and Apple surged $1.23 to $84.35. Cisco slipped 6 cents to $26.68 after soaring nearly 13% last week, helped by the company’s forecast of faster sales growth.

* In the Internet sector, Google jumped $7.48 to $481.03. The stock has risen 31% since Aug. 2. It reached a record closing high of $486.60 on Oct. 25.

* Drug stocks were mixed after sliding last week on concerns that Democrats in Congress might try to rein in prescription drug prices. Merck added 34 cents to $43.46 and AstraZeneca gained 59 cents to $58.09, but Novartis fell $1.06 to $58.30.

* Defense stocks were mostly higher. They gave up ground last week on fears about a shift in federal spending priorities under the Democrats. Lockheed Martin jumped $1.11 to $86.86. Northrop Grumman added 87 cents to $65.57.

* Airline stocks attracted a wave of buying. AMR, parent of American Airlines, soared $1.52 to $30.58, its highest price since just before the Sept. 11, 2001, terrorist attacks. The pullback in oil prices has stoked optimism about the airline industry’s earnings potential in 2007.

Continental Airlines surged $1.81 to $38.21 and UAL, parent of United Airlines, gained $1.37 to $37.

* Some newspaper stocks were higher after published reports said that insurance industry magnate Maurice Greenberg had emerged as the latest potential bidder for Tribune, the parent of The Times. Tribune rose 43 cents to $32.46, New York Times gained 88 cents to $24.87 and Gannett added 62 cents to $59.78.

* Overseas, India’s Sensex stock index hit a record high, rising 0.9% to 13,399. It is up 43% this year. Mexico’s IPC share index also hit a record high, up 1% for the day. It’s up 36% this year.

In Germany the DAX index rose 0.6% to 6,393.73, its highest in more than five years. The German market is up 18.2% this year.