THE US stock market scored spectacular gains yesterday as investors, deciding the economy was not as strong as they had thought, bid bond prices higher and sent interest rates lower.

On Wall Street, the Dow Jones set a new closing high. The Dow shot up more than 50 points at the open, gave back much of that gain after Philip Morris opened one hour late, but resumed climbing before noon and never looked back.

Stocks followed bond prices higher. The 30 year benchnark Treasury bond was up 11 points late in the day, pushing its yield, which moves opposite the price, down to 6.70 per cent from 6.73 per cent late on Friday.

Bonds rose amid mounting consensus that recent US economic data, including last Friday's release of a surge in industrial production and a big gain in non farm payrolls were not a reliable reading of the economy. That data sent bond prices and stocks tumbling.