NEW YORK -- U.S. stocks rose yesterday, bucking a decline in the bond market, as a barrage of economic reports convinced investors that higher rates have yet to dampen economic growth and corporate earnings.
Stocks also got a boost as the Federal Reserve Bank stepped in to prop up the weak dollar in an effort to stabilize financial markets.
"It's the same old story -- the bond market kept the stock market on a leash for most of the day," said Thomas Gallagher, head trader at Oppenheimer & Co. "It wasn't until the Fed intervened that investors became more comfortable."
The Dow Jones industrial average rose 13.38, to 3,681.69, buoyed by gains in Caterpillar Inc., International Paper Co. and Exxon Corp.
Broader market indexes also rallied. The Standard & Poor's 500 index rose 1.81 to 450.91, with regional banks, utilities and paper companies pacing the advance.
The Nasdaq composite index rose 2.15, to 733.84, as shares of technology and telecommunications companies gained. The American Stock Exchange's market value index rose 0.99, to 439.91.
About three stocks rose for every two that fell on the New York Stock Exchange. Trading was active, with 293 million shares trading hands by the close.
Stocks rallied as the dollar steadied against major currencies after the Fed bought dollars for German marks and for yen, traders said. U.S. Treasury Secretary Lloyd Bentsen said the U.S. intervened in the currency market "to counter disorderly conditions."
Thursday, the dollar fell to a six-month low against the mark and an eight-month low against the yen amid concern about trade tensions with Japan. Yesterday, the dollar rebounded to 101.70 from 101.36 against the yen.
"Having seen the bulk of corporate earnings, investors may be turning to a new area of focus -- the weakness of the U.S. dollar," said Alan Ackerman, market strategist at Reich & Co.
A falling dollar discourages foreign investors from owning U.S. stocks or bonds, as it reduces the returns on U.S. dollar-denominated investments. It also fuels concern about inflation -- the bond market's enemy -- because as the dollar falls, the prices of imported goods rise, traders said.
U.S. Treasury bonds rebounded slightly from the day's lows, tracking the dollar, before closing lower. The yield on the 30-year Treasury rose to 7.31 percent, up from 7.26 percent at Thursday's close.
A barrage of economic reports released yesterday, including moderately strong numbers for personal income growth, consumer spending and homebuilding in March, showed the economy continued to gather steam even though the Fed has raised rates three times since Feb. 4.
Shares of Ford Motor Co. rose 87.5 cents, to $58.375, after the nation's second-largest automaker reported first-quarter profit from operations of $2.54 a share, compared with $1.02 a year ago.
Shares of paper companies, which rise and fall in tandem with economic growth, rose as economic reports showed the rebound in the economy undeterred by higher rates. Scott Paper Co. rose $.625, to $42.875; Weyerhaeuser Co. rose 87.5 cents, to and International Paper Co. rose $1, to $65.25.