FINANCIAL MARKETS : Dow Continues Its Climb, Again Hits a Record

U.S. stocks rose for a third day, pushing the Dow Jones industrial average to a second consecutive record high as shares of computer and economically sensitive companies gained.

“People see that the economy is not running away and that rates could come down to spark a resurgence” in the stock market, said Philip Tasho, a money manager at Shawmut Investment Advisers Inc., which has $14 billion under management. “So people are moving into the perennial technology group.”

Cisco Systems, Sun Microsystems and other companies that make computer networks used for the Internet surged as investors bet they would profit the most from the on-line computer craze.

Philip Morris broke the record high price of 86 5/8 it set three years ago and helped the Dow industrials spurt 16.98 points to 4825.57, their 52nd record this year. The 30-stock average is up 1.8% for the week--the biggest weekly percentage gain since the week ended July 7.

The Morgan Stanley cyclical index of 30 stocks reached 336.6, its highest level in a month. The Standard & Poor’s 500-stock index closed 8 points away from its Oct. 19 record. The index, which represents 74% of the value of all U.S. stocks, rose 0.85 point to 590.57. Prices for computer systems, tobacco and semiconductors gained, while those for telephone, regional bank and health care issues slipped.

The technology-laden Nasdaq composite index jumped 8.34 points to 1,065.66, approaching its all-time high of 1,067.40 set Sept. 13.

Computer network stocks stole the scene from Internet software makers today. The Wall Street Journal, citing analysts, said companies that make the computer equipment for on-line services are a better investment than Internet software companies just beginning to make money.

The Interactive Week Internet index jumped 2.2% to a high of 238.12 on Thursday as companies such as Netscape Communications that make software to navigate the Internet jumped at least 8%. On Friday, communications equipment shares helped push the index up 3.3% to an all-time high of 246.03.

Computer-related stocks are picking up steam as investors anticipate that the Federal Reserve Board will cut interest rates again this year to spur economic growth, money managers said.

Technology stocks have been the engines behind this year’s market rally, and they could propel further gains.

“Techs are re-emerging from a slight correction,” said Phil Schettewi, a money manager at Washington-based Loomis Sayles, which manages $2.5 billion. “They won’t have as dramatic a move, but a lot of these stocks still sell at attractive valuation levels.”

EMC stock jumped 11% and was the most actively traded issue on U.S. exchanges after the company signed agreements with Hewlett-Packard and AT&T; to supply storage devices for computers linked to computer networks.

Financial stocks, meanwhile, slipped as concern grew that more consumers could default on their loans, thus hurting those companies’ profits. The S&P; major regional bank index fell 2.17 points, or 1%, to 228.67; it peaked two weeks ago at 243.72.

Among the banks feeling the effect were NationsBank, which fell 1 to 67 1/2, and Wells Fargo, down 3 5/8 to 212 1/4.

Also fueling hopes of a Fed rate cut has been this week’s slew of economic reports showing that the economy is slowing and that inflation is not accelerating. The prospect that the U.S. government will balance its budget would also point to lower rates in the future, money managers said.

In another signal that the zigzagging U.S. economy is slowing down again, the federal government said Friday that the nation’s employers added a relatively skimpy 116,000 jobs to their payrolls last month, overshadowing news that the U.S. unemployment rate inched down to 5.5% in October from 5.6% in September.

The yield on the 30-year benchmark bond rose 0.03 percentage points to 6.27%.

“Economic growth is not dead, but it’s not really alive, so it gives the Fed room to ease,” Shawmut’s Tasho said. He said economically sensitive steel, paper and auto companies that slumped as the economy slowed may be the best buys now.

Edison Bros. Stores filed for Chapter 11 bankruptcy protection, becoming the second major mall-based specialty retailer after Petrie Retail to seek protection in a month. Trading in the stock was halted.

That helped spur a decline in retailer shares, many of which had gained Thursday after posting October sales results.

Dayton-Hudson slipped 7/8 to 73, after jumping 7.6%.