Blue chip stocks rang in the new year with a late rally Thursday, sending the Dow Jones industrials to their fifth straight record close.
The Dow gained 3.58 points to close at 3,172.41.
But in the broader market, losing issues edged gainers 931 to 845 on New York Stock Exchange volume of about 207.6 million shares. On Tuesday, 248.5 million shares changed hands.
The Dow was off as much as 20 points Thursday, but by the close computer-driven buying propelled the index into the plus column.
Ron Doran, trader at C. L. King, said there was a tug of war between those taking profits and those using the weakness to buy in anticipation that stocks would rally further.
"There were a great deal of buy programs in the last hour," said Thomas Walsh, head of trading at Nikko Securities.
Low interest rates and the prospects for an economic recovery in spring or summer are luring fresh funds into stocks, analysts said.
"It's not a case in which stocks are cheap anymore, but institutional investors are adding to portfolio positions in hopes of better earnings looking out to the second and third quarter," said C. L. King's Doran.
"They're forced in by low interest rates and the amount of cash they're receiving from individuals," he said.
The Federal Reserve's sharp cut in interest rates last month set fire to the market, as investors grew convinced that the move to make credit cheaper would help encourage consumers and businesses to spend and fuel the sluggish economy.
Among the highlights:
* Toys R Us, the most active NYSE issue, jumped 2 to 34 3/4. The firm reported a 7.9% increase in same-store sales over Christmas.
* Many high-tech stocks staged a surprise rally. Compaq leaped 3 3/8 to 29 3/4, Apple rose 3 1/8 to 59 1/2, Dell jumped 1 3/8 to 27, and Microsoft gained 2 3/4 to 114.
* In the Dow, profit taking hit Allied-Signal, off 1 7/8 to 42, and United Technologies dropped 1 1/8 to 53 1/8. But GM helped boost the Dow, soaring 2 1/8 to 31. Among other auto makers, Ford rose 1 to 29 1/8, and Chrysler added 3/4 to 12 1/2.
* Oil stocks were sharply higher. Arco rose 2 5/8 to 109 3/8, Halliburton jumped 2 to 30 1/2, and Amoco gained 1 3/8 to 50 1/2.
* Other stocks in demand included Jacobs Engineering, up 1 3/8 to 28 3/8; Litton Industries, up 2 1/4 to 90 1/8, and Merrill Lynch, which shot up 3 1/8 to 62 1/4.
* The Brazil Fund gained 1 1/8 to 15 7/8. Brazilian stocks soared 11% to a new record close on hopes for economic recovery.
Overseas, London stocks edged lower, with the Financial Times-Stock Exchange 100-share index down 0.3 at 2,492.8 points. In Frankfurt, the DAX index finished up 23.90 points at 1,601.88. Tokyo markets were closed for a weeklong New Year's holiday.
Bond yields rose as the year-end rally failed to carry through.
The price of the Treasury's bellwether 30-year bond was down 7/8 point, or $8.75 per $1,000 in face amount. Its yield rose to 7.46% from 7.39% Tuesday.
Bond analysts said Treasuries declined because supply simply exceeded demand as many traders stayed away.
The federal funds rate, the rate on overnight loans between banks, was 5.5%, up from 4.0% Tuesday.
The dollar rose against key European currencies despite new evidence of economic weakness in the United States.
Currency traders attributed the dollar's strength to short-term demand after the closure of all financial markets on New Year's Day. Some said there was a feeling in the foreign exchange market that the dollar may have been oversold recently, which prompted some traders to buy.
In New York, the dollar fetched 124.60 Japanese yen, down from 124.78 Tuesday. It rose to 1.531 German marks from 1.517. The British pound brought $1.865, down from $1.868.
Other dollar rates in New York versus levels Tuesday: 1.3665 Swiss francs, up from 1.3590; 1.1509 Canadian dollars, down from 1.1555; 5.2305 French francs, up from 5.1845, and 1,158.00 Italian lire, up from 1,149.25.
Crude oil futures prices climbed for the second session in a row, boosted by a report that U.S. supplies shrank last week.
On other commodity markets, grain and soybean futures rose while precious metals were mixed, pork futures retreated and cattle futures were mixed.
Light, sweet crude oil for delivery in February rose 37 cents to $19.49 a barrel on the New York Mercantile Exchange. Crude gained 47 cents the day before New Year's.
U.S. commodity markets were closed Wednesday, so Thursday was the market's first chance to react to Tuesday's weekly American Petroleum Institute showing a 10.3-million-barrel decline in domestic crude stocks for the week ended Dec. 27.
Most-active March silver slumped to an early low of $3.855 an ounce before reversing course. The contract topped the pivotal $4 mark before finally settling 6.3 cents higher at $3.975 an ounce.
Gold also rebounded, coming back from a 3 1/2 month low, although the February delivery ended $2 lower at $353.20 an ounce.
"We saw some light . . . buying, but I question just how far these markets are going to run on paper-type futures buying," said one metals analyst of the largely speculative rally in metals.
"I've yet to see any kind of strength in the physical markets" for metals, he said.
Copper prices tumbled for the third consecutive trading session, falling to 5 1/2-month lows in heavy dealings.
March copper dropped 1.85 cents to 95.70 cents a pound.
But some analysts questioned whether the price fall would continue.
"The recent weakness may prove to be climactic," given that too many speculators have ganged up on the sell side and may have to buy back their copper positions, said analyst Nick Van Nice of Commodity Trend Service.