Indexes Soar to New Records; Bond Yields Fall

Stocks surged higher Thursday, lifting the Dow Jones industrial average to another record high, as a drop in interest rates eased investor fears about upcoming corporate profit reports.

The Dow rose 112.39 points to close at 10,197.70. The index has gained 365 points over the last four sessions.

Two broader market indicators, the Nasdaq composite index and the Standard & Poor’s 500 index, also set new closing highs for the third time this week.

The Nasdaq composite, which is heavily weighted with technology stocks, rose 28.96 points to 2,573.39 despite a lackluster performance from stalwarts Dell Computer and Intel. The S&P; 500 rose 17.09 points to 1,343.98.

Two interest rate cuts in Europe--one by the Bank of England and the other by the European Central Bank--helped the stock market cope with worries about upcoming earnings reports.

The rate cuts sent yields lower in the U.S. bond market. The yield on the 30-year Treasury bond fell to 5.44% from 5.51% on Wednesday. That trend pleased Wall Street because reduced borrowing costs will take less of a toll on corporate profits.

Financial stocks, which are particularly sensitive to changes in interest rates, closed higher, with Citigroup up $1.31 to $73 and American Express advancing $1.31 at $127.75. Both are Dow components.

Lower interest rates in Europe could also prompt more spending in that region, which would help U.S. companies that do business overseas.

Stocks of Dow companies with a big international presence rose moderately, including Coca-Cola, up $1.94 to $60.88 and drug giant Merck, up $1.44 to $81.63.

“People finally realize how important foreign economies are to the domestic industry,” said Alfred Goldman, chief of market strategy for A.G. Edwards & Sons.

Meanwhile, Wall Street received more good news about the U.S. economy. The Labor Department reported the number of Americans claiming unemployment benefits rose last week but remained at less than 300,000 for the 10th consecutive week, the longest such stretch in 25 years.

Advancing issues outnumbered decliners by an 8-7 margin on the New York Stock Exchange.

The NYSE composite index rose 8.05 points to 624.28, and the Russell 2,000 index of smaller companies rose 2.12 points to 399.89.

Among the highlights:

* HMOs were among the biggest losers after Humana, down $4 to $12.19, warned it will fall short of first-quarter earnings’ estimates. PacifiCare dropped $6.44 to $61.31, and United Healthcare fell $6 to $44.69.

“If you disappoint in this market, you’re taken out behind the barn and spanked,” Goldman said.

* HNC Software plunged $11.75 to $15.50 after the company warned that its first-quarter results will be below Wall Street expectations.

* The biggest mover on the Dow was chemical maker Union Carbide, which rose $5.50 to $51.38 on takeover speculation. Union Carbide is frequently the subject of merger rumors.

* Tech stocks fluctuated as traders were encouraged by a strong Yahoo earnings report late Wednesday but remained cautious about other company earnings.

Yahoo fell $1.75 to $206.69 after running up sharply earlier in the week. Dell Computer fell $1.44 to $45, and Intel fell $1.06 to $131.06, as some high-tech stocks dropped in response to a disappointing earnings outlook from Advanced Micro Devices, which fell 63 cents to $15.56.

* Healthy March sales reports helped most retailers, including Dow component Wal-Mart, which rose $4.75 to $102.25.

Market Roundup, C6