NEW YORK -- Stocks gained yesterday as investors grew more optimistic that a report tomorrow will show ample job gains and that most third-quarter earnings will meet forecasts.
Gains in overseas stock markets and the lack of domestic investment alternatives also pushed up stocks. Retail, long-distance phone and entertainment stocks led the advance.
Investors "are looking for a good job-creation number," said Richard Ciardullo, research director at Eagle Asset Management in St. Petersburg, Fla. "I hope we don't get a big disappointment."
The Dow Jones industrial average advanced for a second day, rising 11.73 points, to 3,598.99, after having touched a session high of 3,605.98 amid computer-guided buy orders. Stocks that are sensitive to cycles in the economy, like Sears, Roebuck and Co., Chevron Corp. and Goodyear Tire & Rubber Co., paced the market.
The Nasdaq Combined Composite Index rose 2.50, to 764.77, just shy of a record, led by a rise in Microsoft Corp., MCI Communications Corp. and Food Lion Inc. On Tuesday, the Nasdaq slid 2.57 after Advanced Micro Devices Inc. posted unexpectedly weak earnings.
"When we have a setback" in over-the-counter stocks, "it's a one-day setback," said Lance Zipper, head of OTC trading at Kidder, Peabody & Co. Investors think technology and other OTC stocks are "less affected by the economy than the larger Dow stocks."
The Standard & Poor's 500 Index dropped 0.46, to 460.75, after having fallen 0.13 on Tuesday, to 461.21.
Advancing stocks exceeded declining issues on the New York Stock Exchange by about 9-to-7. Trading was active, with about 287 million shares changing hands.
Many traders said they were confident that tomorrow's nonfarm payroll report for September would show strong job gains, thereby buoying consumer spending and retail stocks.
Noting the recent declines in first-time claims for unemployment benefits, economists predict that nonfarm payrolls rose about 138,000 in September, reversing a decline of 39,000 in August.
"Hopes are growing that the September numbers will be relatively strong," thus lifting consumer confidence and spending, said Alan Ackerman, executive vice president at Reich & Co.
Yesterday's stock market gains were helped by the fact that "earnings are starting to come through," said Peter DaPuzzo, senior managing director at Cantor, Fitzgerald & Co.
Stock markets were strong worldwide yesterday, and the optimism spilled over to U.S. markets, Mr. Ackerman said. "The hopes for interest-rate cuts, the retreat from recession in Europe and strength in the U.S. market overnight propelled the U.K., France and Germany to strong gains," he said.
European stock markets were higher as Germany's DAX index closed up 0.73 percent, to its second straight record high, as turmoil in Russia receded. Britain's FT-SE 100 index rose 0.51 percent, to a record high. In Tokyo, the Nikkei 225 index rose 0.88 percent.
Nike Inc. fell 75 cents, to $45.25. Michael Jordan, the basketball star whose "Air Jordan" sneakers are among Nike's best-selling products, announced his retirement yesterday.