MARKETS SOAR; DOW BREAKS RECORD - YET AGAIN.

Byline: Phil Galewitz Associated Press

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 to 10,197.70, taking the blue-chip index past the closing high of 10,085.31 it set Wednesday. It was the Dow's third record close this week; the index has gained 365 points over the past 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, which is heavily weighted with technology stocks, rose 28.96 to 2,573.39 despite a lackluster performance from stalwarts Dell and Intel. The S&P 500 rose 17.09 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 prices higher and yields lower in the U.S. bond market - the yield on the 30-year Treasury bond fell to 5.44 percent from 5.50 percent late 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 $1.3125 to $73 and American Express advancing $1.9375 at $127.75. Both are Dow components.

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

Stock traders have treaded cautiously in recent days amid warnings that some companies' first-quarter earnings would be disappointing. Even the Dow's 121-point surge Wednesday was evidence of a wary market - investors were avoiding risky technology stocks and seeking the relative safety of blue chips.

Stocks of Dow companies with a big international presence rose moderately Thursday, including Coca-Cola, up $1.9375 to $60.875 and drug giant Merck, up $1.4375 to $81.625.

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

Technology stocks fluctuated through the session as traders were encouraged by a strong Yahoo! earnings report late Wednesday but remained cautious about other company earnings.

Yahoo! fell $1.75 to $206.6875 after running up sharply earlier in the week.

On the Nasdaq, Dell Computer fell $1.4375 to $45 and Intel fell $1.0625 to $131.0625, as some high-tech stocks dropped in response to a disappointing earnings outlook from Advanced Micro Devices, which fell $0.625 to $15.5625.

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

General Electric, which reported earnings in line with analysts' expectations, was down 50 cents to $114.

The biggest mover on the Dow was chemical maker Union Carbide, which rose $5.50 to $51.375 on takeover speculation. Union Carbide is frequently the subject of merger rumors.

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Photo

PHOTO (Color) Richard Grasso, left, chairman of the New York Stock Exchange, joins Viacom President Sumner Redstone and actor Kelsey Grammer on Thursday for a Nickelodeon-inspired ``sliming'' as the opening bell rings to start the trading day.

Suzanne Plunkett/Associated Press