The Dow Jones industrial average gained 135.26 points, the second-biggest point total in history, closing at 6,587. While impressive, the increase ranked much lower in percentage terms. And even with two days of gains, the market is still below its record of 7,085.16 set on March 11.

The slight 0.1 percent rise in the Consumer Price Index reported by the Labor Department was well below the 0.3 percent advance in February and even better than economists predicted.

On Wall Street, advancers beat decliners by a 12-to-5 margin on the New York Stock Exchange, with 1,865 up, 769 down and 699 unchanged. NYSE volume was 506.85 million shares vs. 406.79 million yesterday.

The Standard & Poor's 500-stock list rose 10.99 to 754.72, the NYSE's index climbed 6.13 to 397.62, and the American Stock Exchange composite index rose 2.09 to 555.06.

But the technology-laden Nasdaq market stumbled, down 3.65 to 1,212.76, as computer-industry shares continued to struggle. Intel Corp. slid as the most active Nasdaq issue after the chipmaker beat analysts forecasts for the first three months of the year, but cautioned that sales may be flat this quarter.

The big rally in stocks was fueled by hefty gains in the bond market.

Yields on 30-year Treasury bonds -- a barometer for long-term borrowing costs -- tumbled to 7.09 percent from 7.17 percent late yesterday, when it had reached the highest level since July. The yield moves in the opposite direction of a bond's price.

"The Goldilocks economy lives. This continues to be the best of all possible worlds," said Robert Dederick, economist at Northern Trust Co. in Chicago. "Despite tight labor markets, inflation is refusing to emerge."

Even with today's good news, the market is likely to remain edgy as investors fret about what the Federal Reserve will do at its next meeting on May 20. At the March 25 meeting, the central bank nudged a key interest rate up by a quarter percentage point, the first increase in rates in more than two years.

Many analysts say the economic expansion now in its seventh year -- third longest in history -- is too rapid and the resulting wage and price pressures will trigger higher inflation unless the Fed dampens demand by increasing borrowing costs.

But Fed critics, who attacked the March rate increase as premature because there are no signs of inflation, likely will say today's report bolsters their argument.

For the first three months of this year, consumer prices were rising at an annual rate of just 1.8 percent, far below the 3.3 percent increase for all of 1996. The improvement reflected moderation in both food and energy costs, which had been adding to price pressures most of last year.

In March, the cost of gasoline, home heating oil and natural gas all declined. The 4.2 percent drop in natural gas prices was the biggest one-month decline since the government began keeping records in 1952.

Total energy costs were down 1.7 percent, the biggest decrease since a 2 percent decline last June.

Food costs were unchanged in March after having jumped 0.3 percent in February. Excluding the volatile energy and food categories, the so-called core rate of inflation posted a modest 0.2 percent increase in March, matching the February gain.

The improvement reflected lower prices in grocery stores for meat, poultry, fish and eggs. Vegetable prices posted a decline of 1.8 percent decline even though the price of tomatoes jumped 24.9 percent, the biggest gain in a year.

So far this year, the core inflation rate has been rising at an annual rate of 2.4 percent, little changed from the 2.6 percent for all of 1996.

Airline fares were up 4.5 percent in March, the biggest increase since February 1996, partly due to resumption of the federal ticket tax.

Clothing prices fell 0.3 percent last month following six months of increases.

Medical care, where moderation had helped to keep labor costs under control in recent years, showed a 0.4 percent jump in March.