LEAD: A balloon, still inflated, skipped with the wind down Broadway yesterday, perhaps the last celebrant of the night before.

RENEWAL RITUALS CHRISTEN THE NEW YEAR

LEAD: With bond yields falling to their lowest level in about nine years, corporate treasurers displayed an awesome appetite for borrowing in 1986. More than $200 billion of new bonds were issued, twice the record set in 1985.

STOCK STRENGTH PREDICTED...WITH HEAVY BOND DEMAND

LEAD: After what one local economist called ''a hiatus of generalized happiness,'' Brazilians appear to be rapidly losing faith in the anti-inflation program decreed by the Government last February.

BIG PRICE INCREASES SHAKE BRAZILIANS

LEAD: Sometime this year, unless every political pundit here is mistaken, the British Government will call a general election, sending the parties out to do battle armed with their conflicting ideologies, exhortations and promises. But in recent weeks, Britain's two big parties have been engaged in a competition of a different sort - selling holiday gifts to the party faithful.

BRITISH PARTIES ENGAGED IN A NEW COMPETITION

LEAD: A 17-year-old girl from Queens was killed and nine other people were injured yesterday in an early-morning two-car accident here, the police said.

1 Killed and 9 Hurt In a Collision on L.I.

LEAD: IN ''Route 1 and 9,'' the dramatic collage by the experimental theater collective the Wooster Group, blindfolded actors in blackface put up a tin house.

CULTURAL COLLISIONS ON 'ROUTE 1 AND 9'

LEAD: Fifty-eight days after winning re-election by the largest margin of any governor in New York State history, Mario Matthew Cuomo was inaugurated today for a second term, saying his administration had proved that government could be both compassionate and fiscally responsible.

SECOND INAUGUAL BY CUOMO SUMS UP ACCOMPLISHMENTS

LEAD: President Reagan's new budget proposes $1.8 trillion in military spending in the next five years but would slash Federal farm aid by more than half and sharply curtail the growth of many other domestic programs over the same period.

BUDGET WILL ASK CONTINUING RISES FOR THE MILITARY

LEAD: NEW YORK in January is anything but a winter wonderland, as winds gain tornado force at skyscraper corners and sweep the streets clean of sidewalk vendors, bicycle messengers and pedestrians. In winter, the midtown streets, deep in holiday blahs and shorn of adornment, are for brisk movement rather than serendipitous dawdling - and thoughts turn to the great public interiors that serve as idyllic refuges.

WALKER AND STROLLER COME IN FROM THE COLD

LEAD: John Cardinal O'Connor of New York today used the occasion of his first public ceremony in Israel to apologize to the country's people and Government for canceling meetings he had scheduled with leading Israelis.

O'CONNOR, IN JERUSALEM, APOLOGIZES TO ISRAELIS

LEAD: It is 4:52 A.M. and someone out there is still blowing a New Year's Eve horn. The squeal ricochets off the subway walls, bounces down the rails and disappears somewhere in the southbound tunnel of the 42d Street station.

SUBWAYS HOLD RESIDUE OF NEW YEAR'S REVELS

BUSINESS DIGEST: FRIDAY, JANUARY 2, 1987

LEAD: The Dow Jones industrial average climbed more than 22 percent in 1986, reaching a record of 1,955.57 on Dec. 2.

The Markets in '86

LEAD: UPPER midtown, with its abundance of shops and art galleries, is an ever-changing terrain for a stroll-and-stop type of peregrination. Yet, there may be moments when a walker feels unable to go one more block without some nourishment. Not a full-fledged meal, but merely a warm drink or a light snack to refuel the spirits.

WHERE TO SAVOR A CROISSANT OR SIP A CAPPUCCINO

LEAD: Friday MORE IN PREVIEWS It was 25 years ago that ''A Man for All Seasons'' first opened on Broadway, and its story about Sir Thomas More continues to be performed around the world. Philip Bosco, the longtime New York actor, is starring as More in a production directed by Paul Giovanni at the Roundabout Theater, at 100 East 17th Street.

WEEKENDER GUIDE

LEAD: Lawyers for the two surviving victims of the Howard Beach attack said yesterday that their clients would cooperate with Federal authorities if they take over the case. But the lawyers said they would not be satisfied unless Governor Cuomo appointed a special state prosecutor to handle the case.

LAWYERS ASSERT QUEENS VICTIMS WOULD AID U.S.

LEAD: For the second quarter in a row, the Commerce Department has lowered the minimum prices at which Japanese manufacturers can sell their computer chips in the United States, according to analysts and industry sources.

U.S. TRIMS CHIP PRICES OF JAPANESE

LEAD: When the top man loses on the first Tuesday of November, the county courthouse has a mighty lonely feel on Dec. 31. ''After tomorrow, who knows what?'' said Joan Doll, the secretary to the outgoing Essex County Executive, Democrat Peter Shapiro.

A Day of Change For a Wunderkind

LEAD: Federal investigators today searched for signs of arson in the rubble of a casino and other public rooms of the luxury hotel that was swept by fire on New Year's Eve.

DEATH TOLL AT 43, 100 INJURED IN FIRE IN SAN JUAN HOTEL

LEAD: On Aug. 13, 1982, with the nation stumbling out of a recession, the Federal Reserve Board used its vast powers over interest rates to try to bring the economy out of its slump, and in doing so touched off the Great Bull Market of the 1980's.

STOCK STRENGTH PREDICTED...

LEAD: A winter storm, combined with unusually high tides and gale-force winds, caused extensive damage along the Southern coast yesterday before sweeping northward into the New York metropolitan area.

STORM AND TIDES BATTER THE SOUTH AS SNOW HITS THE NEW YORK AREA

LEAD: Technology companies are likely to outperform the rest of American manufacturing in 1987, the Government predicted in an annual forecast. But as in the past, it said that service industries should do much better than manufacturing.

TECHNOLOGY SEEN AS TOP SECTOR

LEAD: Afghan Cease-Fire Plan  Afghanistan's Government announced that starting Jan. 15 it would observe a cease-fire, but guerrilla reaction seemed negative. Page A10.

INSIDE

LEAD: An off-duty police officer was shot in the face without warning on a crowded commuter train in Pennsylvania Station early yesterday after asking several youths, who the police said were carrying a gun, switch-blade knives, brass knuckles and crack, not to smoke in a nonsmoking car.

OFFICER SHOT AT TERMINAL OVER SMOKING

LEAD: For four and a half hours Wednesday, Dominick P. Pannunzio and 19 other guests in the burning Dupont Plaza Hotel lay sprawled on a 16th-story balcony, certain they were going to die.

CRYING AND PRAYING, WAITING FOR DEATH ABOVE THE FLAMES

Shelley Hennig is an American actress, model and beauty queen. She is the recipient of several accolades, including a Teen Choice Award and two Daytime Emmy Award nominations.

Shelley Hennig, American actress and model

Shelley_Hennig

Robert Steven Milsom is an English footballer who plays as a midfielder for National League South club Dorking Wanderers.

Robert Milsom, English footballer

Robert_Milsom

Loïc Alex Teliére Hubert Rémy is a French former professional footballer who played as a forward.

Loïc Rémy, French footballer

Loïc_Rémy

Harekrushna Mahatab was the leader of the Indian National Congress, a notable figure in the Indian independence movement and the Chief Minister of Odisha from 1946 to 1950 and from 1956 to 1961. He was popularly known by the sobriquet "Utkal Keshari".

January 2, 1987

Headlines from January 2, 1987

RENEWAL RITUALS CHRISTEN THE NEW YEAR

STOCK STRENGTH PREDICTED...WITH HEAVY BOND DEMAND

BIG PRICE INCREASES SHAKE BRAZILIANS

BRITISH PARTIES ENGAGED IN A NEW COMPETITION

1 Killed and 9 Hurt In a Collision on L.I.

Billboard 200

Bruce Springsteen & The E Street Band 1975-1985

Slippery When Wet

Third Stage

The Way It Is

Fore!

Notable Births

Notable Deaths

Historical Context for January 2, 1987