YOUR MONEY : Dow Jumps 40 After Upbeat Greenspan Talk

Stocks and bonds rallied Tuesday as Federal Reserve Board Chairman Alan Greenspan refrained from questioning markets’ heights and instead made upbeat comments about the economy.

The Dow Jones industrials jumped 40.03 points to a record 6,883.90, their fourth straight record finish and 10th new high in 12 sessions.

Broader measures also closed at new highs after bouncing back from a weak start. The Nasdaq composite index gained 12.69 points to a record 1,376.97.

For much of the session, attention was fixed on Greenspan, who appeared before a Senate panel to discuss the state of the economy.

Although he did warn about the risks of wage-driven inflation, his address was fairly sunny, as he noted that the economy has shown vigor with little sign of inflationary tensions. That calmed investors who worried the Fed might tighten credit soon.

In the bond market, the yield on the bellwether 30-year Treasury bond fell to 6.78% from Friday’s close of 6.83%. The bond market had been closed Monday in observance of Martin Luther King Jr.’s birthday.

Moreover, Greenspan didn’t raise the issue of potential speculation in booming financial markets. In contrast, on Dec. 5 he gave a speech in which he made the now-famous reference to “irrational exuberance” in the stock market--not as a statement of fact, but as a question of how the Fed should recognize it and what it should do about it.

“Greenspan’s speech was much more market-friendly than the comments he’s previously made and the comments made recently by some other Fed officials,” said Hugh Johnson, chief investment officer at First Albany.

Still, even as leading stock market indexes advanced, breadth was weak. Advancing issues outnumbered decliners by only a narrow margin on the New York Stock Exchange, where volume was very heavy.

Among Tuesday’s highlights:

* IBM rose 1 to a nine-year high of 168 in anticipation of a strong earnings report released after trading ended. Though investors viewed the results favorably, many felt an even higher number was needed for IBM to sustain the recent surge in its stock.

* Far clearer was Wall Street’s attitude about Boeing’s decision to scrap plans to build a costly stretch version of its 747 jumbo jet. Its shares surged 7 3/8 to 113 7/8, giving a big lift to the Dow. (Boeing is one of the Dow 30.)

* Besides IBM, a number of tech issues continued to rise, including Microsoft, up 4 1/4 to 95; Intel, up 2 13/16 to 148 1/16; Yahoo up 2 3/8 to 31 7/8; and Sun Microsystems, up 1 to 33 3/8.

* Brokerage stocks also surged, with Merrill Lynch up 2 1/4 to 86 5/8 and Salomon up 2 5/8 to 51 3/4, riding the bull market wave.

* Mafco Consolidated Group jumped 8 1/8 to 35 1/4 on news that its corporate parent, Mafco Holdings, offered to buy the 15% it did not already hold for $38.50 per share in cash.

* On the downside, ventilator maker Nellcor Puritan Bennett tumbled 5 3/4 to 18 after it reported disappointing results.

Overseas, Tokyo’s Nikkei stock average fell 0.7%, Frankfurt’s DAX index fell 1.8%, and London’s FTSE-100 edged higher.

Market Roundup, D6