NEW YORK -- Stocks surged Friday, with technology shares lifting the Nasdaq market to a record high as long-term interest rates fell on news that inflation was under control.
Wall Street was also betting that the Federal Reserve may be done raising rates after boosting rates twice this summer amid signs of inflation.
However, the dollar slid as investors focused instead on brightening economic prospects for Europe and Japan.
The Dow Jones industrial average ended up at 107.33 points, or 1.01 percent, at 10,729.86, after soaring 227 points on Thursday.
The Nasdaq composite index was up an impressive 91.21 points, or 3.17 percent, at 2,966.43, surpassing its record close of 2,915.95 set 11 October.
"It was a good day, a solid day, but it's Friday and we start all over again on Monday," said Bryan Piskorowski, market analyst at Prudential Securities. "I don't think we're in a brand new world, but you take your winners when you can get them."
Wall Street was undistracted by the ticker-tape parade in Manhattan's financial district, celebrating the Yankees baseball team's World Series victory.
Also, Friday marked the 70th anniversary of the Oct. 29, 1929, stock market crash that brought on the Depression.
In the broader market, advancing issues beat out declines 2,165 to 971. For the second straight day, the volume swelled to more than 1.0 billion shares on the New York Stock Exchange.
The Standard and Poor's 500 index finished up 20.49 points, or 1.53 percent, at 1,362.93.
The market was also relieved that Fed Chairman Alan Greenspan in a speech late Thursday did not touch off another selling panic with talk of a market bubble in stocks or higher interest rates.
Greenspan, speaking to business leaders, gave what the Street viewed as a balanced speech. The Fed chief hailed the technology-led US economic expansion marked by strong productivity gains, but insisted that the pace of economic growth must slow.
Eric Remole, mananging director at Credit Suisse Asset Management, said Greenspan also buoyed sentiment.
"His comments indicated he seems to agree with the new paradigm story that productivity can sustain higher growth rates without triggering an increase in inflation," he said.
Remole added that mostly good third-quarter earnings have also been driving the stock market higher.
"The rally continues," said Peter Coolidge, senior equity trader at Brean Murray & Co. "Although he had some negative comments, it was nothing new, nothing he hasn't said before."
Meanwhile, the benchmark 30-year Treasury bond soared 1-5/32, or US$11.5625 on each $1,000 of face value. The yield, which moves inversely to the price, fell to 6.17 percent -- the lowest since early October -- from 6.26 percent at Thursday's close.
Thursday, stocks powered ahead after the latest economic numbers showed no signs of inflation and the economy still in great shape.
Among the reports released Friday, the Commerce Department said the number of new single-family homes sold in September dropped to a seasonally-adjusted annual pace of 811,000 units. That was lower than the 948,000 annual pace forecast by economists and the lowest pace since an annual rate of 791,000 units in December 1997.
The Chicagoland Business Barometer, a regional economic gauge, showed a rise to a seasonally adjusted 58.8 rating in October, compared with 53.8 in September. Readings above 50 indicate expansion in the manufacturing sector.
The dollar fell to $1.0548 per euro and 104.13 Japanese yen from $1.0514 per euro and 105.09 yen late Thursday.
In the commodities markets, COMEX December gold fell 10 cents to settle at $300.30 a troy ounce, after a volatile week in which producers tried to survive hedge book troubles after gold's big run up a month ago.
On the New York Mercantile Exchange, crude oil for December delivery slipped 7 cents to end at $21.75 a barrel.
Overseas, London's FTSE 100 climbed 106.6 points or 1.73 percent to finish at 6,255.7 -- its highest close since Sept. 9 and a rise of 196.8 from last week. In Tokyo, the Nikkei rose 528.37 points or 3.03 percent to end at 17,942.08, a gain of 503.28 points since last Friday.
Copyright 1999 Reuters Limited.
