Stocks rallied yesterday, setting new highs for the first time in nearly two months as a surprisingly strong economic report eased worries about profits instead of spurring inflation jitters.

The Dow Jones industrial average rose 98.97 points to 8,149.13, just 110 points shy of its all-time best close at 8,159.31 on August 6th.

With about three weeks to go, the Dow is up 26 per cent for the year, more than double what most analysts had predicted.

Broad-market indicators also posted big gains, boosting the Standard and Poor's 500 stock index and the New York Stock Exchange composite index to record highs.