Stocks from the "old economy" carried the Dow Jones industrial average to a new high.

Manufacturers set the pace as the Dow recovered from a bear market that ended in October 2002. The index gained 0.5 percent yesterday to close at 11,727.34, surpassing the record of 11,722.98 in January 2000.

Caterpillar Inc. led the average's rebound. Shares of the world's largest maker of earthmoving equipment reached an all-time high this year, along with those of Boeing Co., the world's second-biggest maker of commercial jets, and United Technologies Corp., the maker of Carrier air conditioners and Otis elevators. General Motors Corp., one of the oldest members of the 30-stock gauge, has been the best performer this year.

Industrial companies received the old-economy label during the 1990s to contrast them with Internet-related companies, the so-called new economy.

"A lot of the basic components of the pre-'go-go' economy are still in the Dow," said David Dreman, who manages more than $17 billion at Dreman Value Management LLC in Jersey City, New Jersey. "That's one of the reasons why it's exceeding now."

The average, created in May 1896 by Dow Jones & Co., lost 38 percent after the Internet-led rally of the late 1990s ended. The Dow industrials peaked on Jan. 14, 2000, about two months before the Standard & Poor's 500 Index and Nasdaq Composite Index set records.

All three benchmarks reached their lows on Oct. 9, 2002. The S&P 500 must gain 14 percent to get above its 2000 peak, while the Nasdaq Composite has to more than double.

Leadership by industrial companies isn't the only thing that makes this market different from the one of the late 1990s. Profits are higher than they were when stock analysts trumpeted companies such as Pets.com Inc., a now-bankrupt online retailer known at the time for its sock-puppet dog.

"There's much less risk in the U.S. stock market than clearly there was in the year 2000," said Keith Wirtz, chief investment officer at Fifth Third Asset Management in Cincinnati, which manages about $22 billion. "Earnings have grown at a much faster pace than stock prices. Valuations look much more rational."

Today, the Dow average is valued at 22 times profits for the prior four quarters, and the S&P 500 has a price-earnings ratio of 18. In January 2000, the Dow traded for 27 times earnings and the S&P 500's ratio was 32.

Caterpillar and other industrial companies have benefited from global economic growth, fueled by expansion in the emerging markets of China and India.

Shares of Caterpillar soared almost fourfold after the Dow set its bear-market low as demand for mining trucks from China and gas-drilling machinery from energy companies surged. The Peoria, Illinois-based company said last month that it would raise prices amid surging demand.

Boeing's stock price doubled. The Chicago-based company had the biggest jump in airliner deliveries in five years during the first quarter.

Shares of United Technologies and another manufacturer, Honeywell International Inc., also more than doubled. General Electric Co., the only original Dow member that's now in the average, gained more than 60 percent.

GM, one of the Dow industrials since 1925, has jumped 72 percent this year as the automaker considers an alliance with Renault SA and Nissan Motor Co. to help revive profit.

The effect of the rallies by these stocks is magnified in the Dow, where six industrial companies account for 25 percent of its value. Industrial-related companies make up 11 percent of the S&P 500.

Weightings of the 30 companies in the Dow, meant to represent all parts of the economy, are based on stock price. The higher the price, the greater a company's influence. Indexes such as the S&P 500 are based on market value.

Boeing is the most heavily weighted stock in the Dow, making up more than 5.5 percent of the average's value, because of its $81.78 share price. International Business Machines Corp. has the second-highest weighting.

IBM and three other computer-related stocks, Hewlett-Packard Co., Intel Corp. and Microsoft Corp., account for 11 percent of its value. Intel and Microsoft were added in November 1999, two months before the peak. Technology companies have a 15 percent weight in the S&P 500, second to financials, and make up 42 percent of the Nasdaq index.

Computer-related shares are the year's worst performers in the S&P 500.