Interest Rate Expectations Drive Stocks Higher

Stocks plowed further into record territory Thursday, as investors looked beyond the budget fight in Washington and focused instead on the possibility of lower interest rates.

Traders said stocks were also supported by today’s double expiration of options and futures contracts, a quarterly event that often adds to trading volatility.

The Dow Jones industrial average rose 46.61 to 4,969.36. While it ended more than 30 points beneath the 5,000 mark, the blue-chip index did record the sixth record high in the last seven trading sessions.

Traders said a 5,000 Dow in the near future was possible. “It’s literally a fractional move in the Dow stocks to get there,” said Greg Nie, a technical analyst at Everen Securities in Chicago.

On the NYSE, advancing issues led decliners by about 7 to 4. Volume was heavy at 418.43 million shares as of 4 p.m., up from 373.06 million on Wednesday.

Stocks got a big boost from the bond market. The 30-year Treasury rose 1 point, pushing its yield, which falls when prices rise, to 6.22 percent, the lowest level since early 1994.

Some of the stocks that moved substantially Thursday:

NYSE

McDonnell Douglas rose 4-3/8 to 90-5/8.

Boeing rose 1-5/8 to 75-5/8.

The two aircraft and defense companies are secretly discussing a merger that would create the world’s largest aerospace and defense company, The Wall Street Journal reported Thursday.

CBI Industries rose 1-3/4 to 33-5/8.

The Oak Brook, Ill., industrial gas supplier rejected Praxair Inc.’s $2.1 billion buyout offer and said it is studying other ways to raise its stock price.

Circle K rose 2 to 23-1/4.

Morgan Stanley upgraded the shares to “strong buy” from “outperform.” On Wednesday, the Dallas-based convenience-store chain reported second-quarter net income of 44 cents a share, nine cents below last year, but the latest quarter included a charge.

NASDAQ

Microsoft fell 4-1/8 to 89-7/8.

Goldman Sachs downgraded the leading software producer’s stock to “moderate outperformer” from “buy” and removed it from the investment firm’s recommended list, saying the company has failed to articulate an Internet strategy.

AMEX

Cablevision rose 2 to 52-1/8.

The company said it had agreed to offer Source Media’s Interactive Channel on all its cable systems, comprising more than 2.6 million cable television customers throughout 19 states.