The 3.4 percent gain recouped
almost all of last week's losses

Associated Press

NEW YORK -- Stock prices soared today, with the Dow Jones industrial average surging a record 257.36 points as signs of moderation in the economy's growth calmed some inflation jitters.

The Dow, which tumbled 265 points last week, recovered almost all of that lost ground to close at 7,879.78 today.

The rise easily surpassed the previous record point gain ever -- an 186.84-point surge on Oct. 21, 1987 that followed the Oct. 19 crash.

The 3.4 percent percentage gain today, while not close to a record, was the biggest in almost seven years. The last time the Dow had a sharper percentage rise was on Jan. 17, 1991, a 4.6 percent rise, or 114.60 points to a much lower 2,623.51.

Even with today's fireworks, the Dow still was 4.6 percent below the record 8,259.31 set on Aug. 6.

Broader market indicators also were sharply higher as Wall Street shook off an August slump in the first trading after the long Labor Day weekend.

Advancers beat decliners by a nearly 3-to-1 margin on the New York Stock Exchange, with 2,174 up, 757 down and 475 unchanged. NYSE volume was 491.82 million shares vs. 407.00 million Friday.

The Standard & Poor's 500-stock list rose 28.11 to 927.58, the NYSE composite index rose 12.42 to 482.90, and the Nasdaq composite index rose 30.77 to 1,618.09.

The Russell 2000 index of smaller companies rose 4.62 to 428.05, its fourth consecutive record close and seventh straight winning session. The American Stock Exchange composite index, which is dominated by smaller companies, rose 6.71 to 656.87 for its first record close since Aug. 6.

Stocks stumbled last month on fears the economy was overheating. But a report today of an unexpected slowing in the growth rate of the nation's manufacturing economy in August helped ease those fears.

The National Association of Purchasing Management said its factory index fell to 56.8 in August from 58.6 a month earlier, while its prices paid index barely budged -- rising to 53.8 from 53.6. The survey of factory executives showed no evidence of heightening inflation in August. Bonds prices rose along with stocks in response.

The benchmark 30-year Treasury bond rose 15/32, or $4.69 per $1,000 bond, to 97 15/32. Its yield fell 4 basis points to 6.57 percent, from 6.60 percent late Friday. Prices and yields move in opposite directions.

Inflation worries had raised the threat the Federal Reserve will push interest rates higher at a Sept. 30 meeting, something that would cool down the economy and dampen corporate profits.