Financial shares, led by a surge in J.P. Morgan on merger speculation, drove blue chips sharply higher yesterday. Investors also cheered the latest economic data that heightened hopes that interest rates may have peaked for now.

J.P. Morgan, which is one of the few remaining independent Wall Street firms, jumped $16.13 to close at a record $167.19 on positive analysts' comments and takeover speculation. The market was buoyed by data, including falling US factory orders, that suggested US economic growth is slowing. But investors were also focused on today's widely-watched employment report for August.