Bargain Hunters Push Dow Over 6,600; Yields Up

A late turnaround Tuesday pushed the Dow Jones industrial average to its first close above 6,600 as bargain-hunting investors shrugged off a worsening interest rate backdrop in another volatile session.

U.S. bond prices fell for a second day, driving yields to a two-month high, as the dollar slid and concern grew that a rebounding economy would speed inflation in coming months.

The Dow ended up 33.48 points at 6,600.66, surpassing Monday’s record of 6,567.18.

Broader measures also turned positive, with the Nasdaq market closing at a record high for the second straight day, gaining 11.33 points to 1,327.73.

Some analysts, however, said the rally was at best a “half-step” forward for stocks. “The rally continues to focus on the upper crust and at some point that becomes troubling,” said Gregory Nie, technical analyst at Everen Securities.

Analysts said the market also benefited from the so-called January effect, a period when stocks are boosted by a flow of cash into mutual funds from corporate bonus payments, dividend distributions and annual retirement account contributions.

The Standard & Poor’s composite index of 500 stocks rose 5.58 points to 753.23. The American Stock Exchange index rose 3.57 to 575.63.

The NYSE Composite index of all listed common stocks rose 2.62 to 396.90. The average share was up 27 cents.

The flow of investment money also helps explain why stocks have managed a pair of record performances despite weakness in the bond market.

The benchmark 30-year Treasury bond lost nearly a quarter point, which raised its yield to 6.79% from 6.77% Monday. The yield moves in the opposite direction to the price.

Investors dismissed reports showing weak retail sales and a drop in November factory orders, focusing instead on reports later this week that may reveal faster employment growth and rising wholesale prices.

In New York, the dollar cost 115.23 yen, down from 115.68 yen Monday.

Analysts said one worry was sidestepped when Newt Gingrich became the first Republican in 68 years to win a second consecutive term as speaker of the House of Representatives.

Among Tuesday’s highlights:

* Leading the Dow industrials higher, American Express rose 2 1/2 to 57 5/8. A single trade of 1 million shares made at the open of the session raised speculation that an investor was amassing shares for a takeover bid.

* Nasdaq was led by Intel, which rose 4 1/2 to 143 3/8, an all-time high.

* Morgan Stanley fell 1 to 55 1/2 after it said earnings were lower than expected.

* Silicon Graphics fell 1 3/4 to 25 1/8 after the company said manufacturing delays are likely to result in a break-even quarter.

* American Medical Response surged 6 3/8 to 39 3/8 after Laidlaw agreed to buy the ambulance company. Laidlaw rose 1 1/4 to 34 1/4.

Overseas, Tokyo’s Nikkei stock average fell 2.8%, Frankfurt’s DAX index rose 0.2%, and London’s FT-SE 100 fell 0.7%.

Market Roundup, D6