FINANCIAL MARKETS : Dow Hits New High as Inflation Fears Cool

Stock prices climbed to record highs on Thursday, following the bond market’s path, as investor fears of inflation were soothed by news of unexpectedly weak March retail sales figures.

At the close, the Dow Jones industrial average was up 10.37 points at 4,208.18, breaking its record 4,205.41 high set on April 6.

In the broader market, advancing issues led decliners by about 7 to 5 on the New York Stock Exchange.

Volume was moderately heavy at 301.57 million shares, down from 327.89 million on Wednesday. That was a bit of a surprise ahead of the long holiday weekend, however. The financial markets will be closed today in observance of Good Friday.

Continued strength in technology issues also sent some broad market indexes to record highs for the second time this week.

The NYSE composite index rose 0.96 point to 275.00, breaking its record closing of 274.04 set on Wednesday. The Standard & Poor’s 500-stock index rose 2.06 points to 509.23, also topping Wednesday’s record closing of 507.17. The Nasdaq composite index rose 4.11 points to 832.64, breaking its closing record of 828.53.

Stock prices headed higher early in the session, as did bonds’, after the Commerce Department said retail sales had risen a moderate 0.2% in March.

Analysts had expected sales to stage a modest recovery last month, and they said the March results signal a slowdown in the economy overall.

Bond investors liked the news because it signals that inflation may not pose a problem. The Treasury’s benchmark 30-year bond yield ended at 7.33%, down from 7.35% on Wednesday. Its price, which rises when the yield falls, rose 7/32 point, or $2.19 per $1,000 in face value.

Bond trading closed early on Thursday, however, in anticipation of the Good Friday recess, and once bonds were out of the picture, stocks lost their steam.

Because the retail sales figures indicate that the Federal Reserve Board is under no pressure to raise interest rates soon, the dollar was pushed lower.

Currency traders were acting cautiously also in anticipation of the holiday weekend and of the release of an emergency economic package by Japan to help counter the harmful effects of the rising yen. In New York trading, the dollar finished at 83.35 Japanese yen, down from 83.68 yen the day before. The U.S. currency also closed at 1.387 German marks, down from 1.400 marks.

Among Thursday’s highlights:

* J.P. Morgan reported first quarter earnings and trading revenue that, although lower than a year ago, beat Wall Street expectations. Its shares rose 3 1/8 to 63 3/4.

* Aluminum Co. of America gained 2 1/8 to 44 3/4 after Morgan Stanley sharply raised its 1996 and 1997 earnings forecasts for the company. Other aluminum stocks joined in the rally. Alumax rose 1 to 27 5/8, and Reynolds Metals added 7/8 to 51 1/8.

* Chrysler shares declined 7/8 to 47 7/8 as it led Big Board volume, after shooting up 9 1/2 points on Wednesday when investor Kirk Kerkorian made a buyout offer.

* Micron Technology gained 1 1/2 to 80, Intel Corp. rose 3 1/4 to 95 and Texas Instruments finished up 2 1/4 to 94 3/4.

Market Roundup, D6