Market Surges in Late Trading; Dow Gains 12

The stock market posted a broad gain Monday, playing an encore to its dramatic January rally.

Securities-industry and bank stocks ran up some of the best gains in a session marked by new highs in some of the broad market indicators.

The Dow Jones average of 30 industrials, down more than 3 points in early trading, was up 12.36 at 1,290.08 by the close.

That left the average about 2 1/2 points below the record close of 1,292.62 that it reached last Tuesday.

Volume on the New York Stock Exchange surpassed 100 million shares for the 18th consecutive session, totaling 113.72 million against Friday’s 105.44 million. Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 136.83 million shares.

Bank Stocks Advance

The combination of heavy volume and rising stock prices attracted new buyers to securities-industry issues like Paine Webber, up 2 1/2 at 41; Merrill Lynch, up 1 1/8 at 34 3/4; Phibro-Salomon, up 1 at 40 1/2; First Boston, up 1 at 66, and E. F. Hutton, up 1/2 at 39 7/8.

Meanwhile, analysts said news reports of great progress in untangling the debt problems of developing countries helped the market as a whole and bank stocks in particular. Citicorp rose 1 7/8 to 43 5/8, Chase Manhattan 1 1/2 to 52 and J. P. Morgan 1 3/4 to 45.

Analysts noted that the general market was still being treated to optimistic signals on the domestic business outlook for 1985.

A monthly survey of corporate purchasing executives, the results of which were reported over the weekend, found that economic activity rebounded in January after a sluggish final four months of 1984. The National Assn. of Purchasing Management said both new orders and production increased sharply last month.

May Focus on Inflation

Along with the improved pace of the economy, however, has come a growing belief on Wall Street that the chances have diminished of any further easing of credit by the Federal Reserve.

With recession worries calmed, many analysts say, the Fed may be ready to go back to concentrating on keeping inflation at bay by restraining the growth of the money supply. That prospect, in turn, has brought caution to many interest-rate forecasts.

International Business Machines was a standout among the blue chips, rising 2 to 137 5/8 and trading at record highs.

General Motors picked up 5/8 to 82 5/8, despite the company’s report that fourth-quarter earnings slumped to $2.71 a share from $4.11 in the comparable period a year earlier.

Student Loan Marketing fell 1 1/2 to 29 1/2. Brokers said investors feared that government budget-cutting proposals would curtail activity in federal loans to students.

Advancing issues outnumbered declines by more than two to one on the Big Board. The exchange’s composite index, up 0.93 at 104.16, and Standard & Poor’s 500-stock composite index, up 1.72 at 180.35, both passed the peaks they reached last week.

The NASDAQ composite index for the over-the-counter market rose 2.34 to 280.77.

At the American Stock Exchange, the market-value index closed at 225.55, up 1.59.

The Wilshire index of 5,000 equities closed at 1,853.051, up 16.492.

Large blocks of 10,000 or more shares traded on the NYSE totaled 2,151, compared to 1,988 on Friday.

Bond Prices Mixed

Bond prices were mixed as rates on short-term interest rates mostly edged lower.

The credit markets were expected to be skittish as they awaited the Treasury’s quarterly refunding operation this week, which includes the sale of $19 billion in new debt.

The Treasury package includes $7.25 billion of new three-year notes to be auctioned today, $6 billion of 10-year notes to be sold Wednesday and $5.75 billion of 30-year bonds to be sold Thursday.

In the secondary market for short-term Treasury securities, yields on three-month bills fell 12 basis points from late Friday to 8.17%. Six-month bills slipped 3 basis points to 8.27% and one-year bills were off 4 basis points at 8.46%. A basis point is one-hundredth of a percentage point.

Yields on 30-year Treasury bonds inched down to 11.33% from 11.34% late Friday.

The federal funds rate, the interest on overnight loans between banks, fell to 8.438% from 8.563% late Friday.

In the secondary market for Treasury bonds, prices of short-term governments slipped 1/32 point, intermediate maturities fell 4/32 point and long-term issues were up 4/32 point, according to the investment firm of Salomon Bros. Inc.

In corporate trading, industrials and utilities fell 1/8 point in light trading.

CH