Stocks closed higher yesterday, as the market tracked the jump in bonds after the Federal Reserve chairman, Mr Alan Greenspan's latest comment on the economy failed to rattle Wall Street. The Dow Jones Transportation index soared to a new high, tagging along with rising airline stocks. The Dow Jones industrial average ended up 12.77 points at 7,835.18.

The session was highlighted by small stocks extending their rally and airline shares driving the Dow Jones Transport index to a record high of 3,026.05, up 66.52 points from Friday's close, and beating its old high of 3,009.25 set August 6th.

In the broader market, advancing issues outnumbered declines 17-10 on moderate volume of 463 million shares on the New York Stock Exchange.

The Nasdaq Composite closed up 9.58 points at 1,645.35.

Traders said investors took heart in a strong Treasury market after Mr Greenspan gave no indications of an imminent credit tightening.