Highest close for Dow since 2001

A plunge in Treasury bond yields propelled stocks sharply higher today as investors grew optimistic that the Federal Reserve’s streak of interest rate hikes will soon end.

Record revenues and a jump in profits at Goldman Sachs Group Inc. also boosted the market and sent the Dow Jones industrials to a nearly five-year high.

The Dow rose 75.32, or 0.68%, to 11,151.34. That was the highest close for the Dow since it stood at 11,175.84 on June 5, 2001.

Investors who watched bond yields reach nearly two-year highs last week were cheered as the yield on the 10-year Treasury note fell to 4.69% from 4.77% late Monday.

The credit markets reacted to signs of a moderating economy, particularly a Commerce Department report that February retail sales had the largest decline in six months.

The report raised hopes that the Federal Reserve will end its string of interest rate hikes in the near future.

Wall Street was pleased with another Commerce Department report, that US business inventories rose 0.4% in January after a 0.8% advance in December. Sales also grew 8.5%. Because the pick-up in sales outstripped the growth in inventories, investors took this as a sign that more inventory investment could be coming.

Goldman’s report of a 62% jump in first-quarter profits also lifted the market. The investment firm’s own stock rose 5.4%.

The company’s “explosive” earnings “bode well for the sector in general, and it’s a sector that all investors are watching,” said Chris Johnson, manager of quantitative analysis at Schaeffer’s Investment Research in Cincinnati.

Broader stock indicators rose. The Standard & Poor’s 500 index rose 13.35, or 1.04%, to 1,297.48, and the Nasdaq composite index rose 28.87, or 1.27%, to 2,295.90.