Falling Interest Rates Boost Stocks

Stocks shot higher on Tuesday and several market indexes set new highs as interest rates plunged on further evidence that economic growth is slowing.

The Dow Jones industrial average surged 38.05 points to 4,484.51, just shy of its previous closing record of 4,485.20 set a week ago.

“Profits count,” said Larry Wachtel, a market analyst at Prudential Securities, “but rates rule the roost.”

On the New York Stock Exchange, advancing issues led decliners by about 11 to 5. Big Board volume came to 339.63 million shares as of 4 p.m., up from 287.83 million Monday.

Stocks got a major boost from the bond market, where the 30-year bond was soaring 2 3-16 points late in the day, pushing its yield, which falls when prices rise, down to 6.53 percent from 6.70 percent on Monday.

Stocks and bonds rose after the Commerce Department said retail sales in May edged up 0.2 percent. That was substantially less than the 0.5 percent increase that analysts predicted and suggested continued weakness in consumer spending.

Some of the stocks that moved substantially Tuesday:

NYSE

ITT, up 6 1/4 to 115 1/2.

The stock shot up after the conglomerate said it would hold a special shareholders meeting to consider breaking the company into three separate, publicly traded companies.

Boeing rose 2 1/2 to 64 7/8.

The airplane maker is the latest beneficiary of a surge in new jetliner orders,, The Wall Street Journal reports.

Cypress Technology rose 1/2 to 37 7/8.

Micron rose 3/8 to 48 1/8.

Motorola rose 3/4 to 61 1/8.

IBM rose 1 5/8 to 91 7/8.

Hewlett-Packard rose 7/8 to 69 3/4.

Digital Equipment rose 1 1/8 to 43 1/4.

Semiconductor and computerrelated stocks rose on a bullish bookto-bill number released for May.

Citicorp rose 2 7/8 to 55 7/8.

Chemical Banking rose 1 1/2 to 46 1/4.

Mellon Bank Corp. rose 7/8 to 43 1/8.

Banking stocks rose as interest rates dropped sharply.

NASDAQ

Sun Microsystems, up 3/8 at 49 3/8.

Microsoft rose 1/8 to 83 7/8.

3Com rose 3/4 to 62 1/8.

These stocks also rose after the book-to-bill ratio report.

Intel fell 9-16 to 111.

The stock backed off early gains that were based on a bullish book-tobill number.

AMEX

U.S. Bioscience rose 1-16 to 5 7-16.

The stock rose Monday after Merrill Lynch upgraded the shares.