Holiday Sales Boost Stocks; Dow Rises 23

Market Overview

Highlights of Monday’s market activity, compiled from Times staff and wire reports:

* The stock market chalked up another solid gain, extending its Thanksgiving-week rally amid increasing optimism over the progress of economic recovery.

But in Hong Kong, the Hang Seng index dropped 176.04 points to 5,810.63 on new tensions between China and the British colony’s authorities over the city’s future. At midday today, the Hang Seng plummeted further, 274.85 points, or 4.3%, to 5,535.78.

* Crude oil futures fell under $20--to a 7 1/2-month low--amid perceptions that OPEC’s agreement to trim production won’t be enough to shore up sagging prices.

* Treasury bond yields were stable, despite mounting worries about the economy’s new strength and the implications for inflation.

Stocks

The Dow Jones industrials, up 54.84 points last week, rose another 22.96 points to 3,305.16.

That marked the average’s first close above 3,300 since it stood at 3,320.83 on Sept. 21.

Broader indexes again hit new highs. The NASDAQ composite index of smaller stocks surged 3.24 points to a record 652.73.

On the New York Stock Exchange, advancing issues outnumbered decliners 5 to 3. Volume was 237.45 million shares, against 106.02 million in Friday’s abbreviated session.

Investors seemed to be encouraged by weekend reports that the Christmas selling season had gotten off to a brisk start at the nation’s retail stores.

Reports to that effect helped bolster hopes that the pace of business activity, generally on the upswing since about the end of summer, will continue upward.

Among market highlights:

* Industrial stocks, which had lagged in the market’s November rally, continued to catch up. Alcoa rose 1 1/2 to 70 1/8, Goodyear jumped 2 1/8 to 71 7/8, Caterpillar leaped 2 1/2 to 56 3/4, Nucor added 1 3/8 to 69 3/4, Emerson Electric gained 1 5/8 to 53 5/8, and RV maker Fleetwood Enterprises rocketed 2 1/4 to 45 1/4.

* Tech stocks resumed their rally, led by IBM, up 2 1/4 to 68 1/4. Some analysts said IBM looks poised to continue its uptrend after recently reaching a 10-year low of 60 7/8.

Among other tech gainers, Apple rose 1 1/8 to 57 1/2, Hewlett-Packard jumped 1 3/8 to 66 1/2, Microsoft gained 1 3/8 to 93 1/8, and Motorola zoomed 2 5/8 to 102 7/8.

* Retailers posting gains included Gap, up 1 to 37 3/4; Limited, up 3/4 to 27; Dillard, up 1 to 50 3/8; Dayton Hudson, up 1 3/4 to 78 3/4, and Neiman-Marcus, up 1 3/8 to 19.

* McDonnell Douglas plunged 3 3/4 to 46 1/4. The Pentagon today will hold a review of a dispute over the canceled A-12 aircraft, which involves a government claim of $1.3 billion against M-D and General Dynamics.

* Caremark, a spinoff from health care firm Baxter International, closed at 13 1/4 on the NYSE. It will begin trading as an independent company today.

In overseas markets, London’s Financial Times 100 index gained 18.7 points to a new high of 2,778.80, helped by Wall Street’s bullish tone. Frankfurt’s DAX index jumped 21.39 points to 1,544.34.

In Tokyo, the Nikkei index added 213.04 points to 17,683.65.

In Mexico City, the Bolsa index slipped 11.54 points to 1,715.69.

Commodities

Light, sweet crude oil for January tumbled 38 cents to $19.89 a barrel on the New York Merc, the first settlement below $20 since last April.

Monday was the first trading day in New York since the Organization of Petroleum Exporting Countries reached agreement Friday to cut output from 25.3 million barrels a day to 24.9 million in the first quarter of 1993.

Crude prices initially rose, reaching a high of $20.41. But the market collapsed in the final hour as traders focused on OPEC’s inability to overcome self-interest among some of its members.

“It seems OPEC’s meeting didn’t cut enough for some people,� said Peter Beutel, energy specialist at Brody, White & Co.

Trading, however, was light. Analysts said there was no other news to drive the market.

Elsewhere, on New York’s Comex, near-term gold rose 30 cents to $334.30 an ounce, and silver rose 1.6 cents to $3.73.

Other Markets

Interest rates were mostly flat, despite the encouraging retail-sales news that indicated a strengthening economy.

The yield on the Treasury’s 30-year bond was unchanged from Friday, at 7.59%.

Trading was thin, and prices stayed in a narrow range, said William V. Sullivan, director of money market research at Dean Witter Reynolds Inc.

Bond traders remain suspicious about good economic news, on fears that a stronger economy will lead to higher interest rates and higher inflation.

The federal funds rate, the interest on overnight loans between banks, remained at 3.375%.

Meanwhile, the dollar declined against most other major currencies as dealers continued to speculate that it has peaked against the German mark.

The dollar eased to 1.592 German marks in New York from 1.598 Friday. It was at 124.70 Japanese yen, up from 124.45.

Market Roundup, D10