NEW YORK -- U.S. stocks finished higher yesterday, rebounding from an early sell-off when bond prices rallied. Oil, auto, telephone and semiconductor shares paced the market's advance.
"Those are the leaders and will remain the leaders as long as we have an expanding economy," said Stefan Abrams, equity strategy director at Trust Co. of the West in Los Angeles, which manages $43 billion.
"Consumer spending is doing just fine," Mr. Abrams said, "but the acceleration in business is in the area of industrial companies, including technologies."
Entertainment, retail, drug and regional bank issues were among the day's biggest losers.
The Dow Jones industrial average gained 17.89 points, to 3,633.65, after reeling downward at one stage 29.34 points, to 3,586.42, as long-term interest rates soared.
General Motors Corp., Minnesota Mining & Manufacturing and United Technologies Corp. boosted the average, offsetting losses in Walt Disney Co., J. P. Morgan & Co. and Caterpillar Inc.
Analysts tied much of yesterday's volatility to tomorrow's expiration of index futures, options on stocks and options on futures.
Among broader market measures, the Standard & Poor's 500 Index climbed 1.70, to 461.60. The Nasdaq Combined Composite Index spurted 6.91, to 739.55, reversing Tuesday's 7.68-point decline and Monday's 3.98-point slide.
Intel Corp., Microsoft Corp. and Oracle Systems Corp. led the advance.
Declining common stocks narrowly outpaced advancing issues on the New York Stock Exchange, where trading was active as 298 million shares changed.
"The stock market got very discouraged" at a morning sell-off in bonds, said Louis Todd, head of institutional equity trading at J. C. Bradford & Co. in Nashville.
Treasury bond yields continued surging yesterday morning amid concern about future inflation, after Tuesday's report that consumer prices rose 0.3 percent in August, topping the 0.1 percent rise projected by economists.
The yield on the benchmark 30-year Treasury bond rose as high as 6.07 percent in the morning before it settled back to 5.98 percent, unchanged on the day.
Rising interest rates lessen the appeal of stocks relative to fixed-income investments.
Investors were also concerned about the strength of corporate earnings, traders and analysts said.
Stocks "slavishly" followed the bond market "because earnings reports up to this date have been on the weak side," said James Solloway, director of research at Argus Research.
Strong second-quarter earnings "might not be repeated in the third," he said. "There's been greater uncertainty about the outlook for decent profits if the weak economy continues."
Meanwhile, Coca-Cola Co.'s statement yesterday morning that it would take a $55 million charge for an increase in the corporate tax rate might herald similar moves elsewhere, threatening earnings forecasts, traders said. Coca-Cola stock fell 50 cents, to $43.625.