January 10, 1985

Expectations of lower interest rates helped push stocks strongly ahead yesterday with both prices and volume reaching their best levels of the new year. The Dow Jones industrial average, lost some ground in late trading but still ended the day 11.04 points higher, at 1,202.74. It had been up nearly 14 points in the early afternoon. Advances on the New York Stock Exchange outnumbered declines by 1,075 to 519.

The Air Force announced today that the General Electric Company would continue to produce the majority of its combat jet aircraft engines in 1986. But in a move that marked a significant recovery for G.E.'s main competitor, the Air Force awarded 46 percent of next year's engine production work to the Connecticut-based Pratt & Whitney division of the United Technologies Corporation. A year ago, the Pentagon concluded what had become known as the ''Great Engine War'' by awarding G.E. 75 percent of the engine production for F-15 and F-16 warplanes in 1985. Pratt & Whitney, which had dominated the industry for decades and had never had to share an award with a competitor, received only 25 percent of the work. The split award in favor of G.E. was seen as an attempt to invigorate competition and hold down costs. The Air Force saw potential savings of $3 billion over the engines' life cycles of about 20 years.

An investment group yesterday said that it had acquired a stake in the Petro-Lewis Corporation, the beleaguered oil and gas production company, and was ''exploring several options,'' including seeking to take it over. In a disclosure statement with the Securities and Exchange Commission, the investor group, Jakobson, Kass Partners of New York, said that it owned 1,367,100 shares of Petro- Lewis common stock. The stake represents 6.3 percent of the Denver- based company's outstanding common shares.

A report in the Finance Briefs column of Business Day yesterday misnamed the company that affirmed the senior debt rating of the Montana Power Company. It was Standard & Poor's.

A blast of Arctic air plunged the temperature in the New York area to the winter's lowest levels, bringing complaints from thousands of residents without heat, stalling commuters whose cars would not start and sending record numbers of homeless men and women to shelters. New York City filled all 863 of its beds for homeless women Tuesday night and was adding emergency beds yesterday to make room for more homeless women last night, according to a spokesman for the city's Human Resources Administration, Jack Deacy. ''We are at record numbers, there's no doubt,'' Mr. Deacy said. ''We do expect with this cold wave continuing that they will go up.''