Another Dow Record; Bond Yields Drop

Market Overview * The stock market finished ahead in a busy session Thursday after late buying boosted the Dow industrial average to another new high.

* Bond yields fell, pushing prices broadly higher as traders reacted to indications that the economic recovery may be losing momentum.

Stocks

Positive economic news and a series of good corporate financial reports put stocks on firm footing. The bond market’s respectable showing--despite government data depicting significant vigor in the home building business--also provided a favorable backdrop for stocks.

The Dow advanced 7.59 past the previous high reached Wednesday to 3,891.96, on Big Board volume totaling a brisk 310.20 million shares. Several other indicators also set new marks.

In the broader market, rising issues narrowly outnumbered those that fell--by about 8 to 7--on the New York Stock Exchange.

Investors concentrated on companies reporting quarterly results as well as those that stand to benefit from improving economic conditions.

“The investments du jour were once again the economically sensitive stocks,” said Alfred E. Goldman of A.G. Edwards & Sons Inc. in St. Louis.

Among the market highlights:

* Computer Associates tumbled 3 1/2 to 41 and was the second-most heavily traded NYSE issue after the company posted sharply higher fourth-quarter earnings.

* Microsoft reported earnings slightly above Wall Street expectations, and its stock rose 3 to 86 1/4. Other software stocks were mostly firmer, with Lotus up 3/4 to 54 5/8 and Oracle Systems adding 1 to 33 3/4.

* Computer maker AST Research shot up 4 3/8 to 29 1/8 after reporting strong quarterly earnings.

* Altera reported earnings and said it did not expect its first-quarter sales growth to reach the double-digit levels of the past five quarters. It fell 5 5/8 to 30.

* Time Warner rose 1 1/8 to 40 1/4. The company said it adopted a defensive rights plan after institutional investors and partners had voiced concerns. It said the plan will not block Seagram from buying a 15% stake in Time Warner.

* Economically sensitive stocks and oil company shares led the blue chips’ rise. Allied Signal rose 7/8 to 79 1/4, while Chevron advanced 5/8 to 90 5/8 and Exxon gained 7/8 to 66 3/8.

Tokyo stocks rose moderately while the Frankfurt and London markets retreated. However, Mexico City’s Bolsa index gained 54.57 points to finish at 2,656.07.

Other Markets

Bond prices initially fell following the release of a Commerce Department report that showed a larger than expected rise in housing starts during December. The government said housing starts shot up 6.2% last month and were up 7.1% on the year to the highest level in four years.

But the market turned around after the Labor Department said the number of Americans filing initial jobless claims surged 23,000 to the highest level in six months during the week ended Jan. 15.

The yield on the Treasury’s main 30-year bond slipped to 6.26% from 6.29%. Its price, which moves in the opposite direction, was up 13/32 point, or $4.06 per $1,000 in face value.

Meanwhile, the dollar fell against most currencies as the German central bank said it would not ease monetary policy and U.S. authorities issued a mixed batch of reports on the economy.

Elsewhere, gold plummeted $4.80 an ounce to $387.50 an ounce on the New York Comex. Silver fell 7.2 cents to $5.254 an ounce.

Market Roundup, D6