Dow Rises 12.51 as Stock Rally Rolls Along : Index Tops 1,900; Highest Close Since Record Set 2 1/2 Months Ago

Blue-chip stocks rose to a 2 1/2-month high Monday, following through on a rally late last week.

The Dow Jones average of 30 industrials rose 12.51 to 1,906.07, its highest close since it stood at a record 1,919.71 on Sept. 4. In the last four sessions, the average has gained a total of 88.86 points.

Volume on the New York Stock Exchange slowed to 150.82 million shares from 200.65 million on Friday.

Analysts said traders were impressed by the market’s strong rebound last week after the initial jolt it suffered when the scandal broke involving investor Ivan F. Boesky.

Boesky’s troubles arising from insider trading allegations are expected to put a damper on speculative activity in stocks regarded as possible takeover targets, at least for a while.

But even before the headlines appeared about Boesky and his alleged trading activities in takeover stocks, many market observers had voiced concern about the level of speculation in such issues.

Thus, from one point of view, the Boesky affair served as a positive development for the market by cooling down undesirable excesses, encouraging traders to look for stocks with more fundamental economic appeal.

Stock prices also got a lift from declining interest rates in the bond market Monday.

Among actively traded blue chips, International Business Machines rose 1 3/8 to 124 5/8, General Electric rose 1 5/8 to 80 5/8, Eastman Kodak climbed to 68 1/2 and American Telephone & Telegraph gained 3/8 to 27 1/8.

Gillette led the NYSE active list, down 10 3/4 at 45 7/8 after a delayed opening. The company reported that Revlon Group withdrew its takeover bid.

Zale jumped 5 to 48 3/4. The company, reversing its previous position, decided to support a takeover bid by Peoples Jewellers and Swarovski International Holding.

Rexnord rose 2 to 20 1/8. The firm plans to swap $20 in cash for each outstanding share as part of a restructuring.

In the high-technology sector, Digital Equipment added 2 5/8 to 105 3/4, Hewlett-Packard rose 1 3/8 to 44 1/8, Data General rose 1 1/2 to 32 3/4 and Texas Instruments rose 2 1/2 to 120.

Some retailing issues also showed strong gains. K mart was up 1 3/8 at 50 1/8, May Department Stores rose 7/8 to 37 7/8 and J. C. Penney climbed 5/8 to 81. However, Federated Department Stores, which has been a frequent subject of takeover speculation lately, dropped 2 to 84 3/8.

Advancing issues outnumbered declines by about four to three in the overall tally on the Big Board, with 887 up, 671 down and 454 unchanged.

Large blocks of 10,000 or more shares traded on the NYSE totaled 2,861, compared to 3,705 on Friday.

In the secondary market for Treasury bonds, the bellwether 30-year bond rose about $6.25 per $1,000 face amount to yield 7.39%, down from 7.44% late Friday.

Prices of short-term governments rose 1/16 point, intermediate maturities rose 3/32 and 20-year issues were up 5/8 point, according to the investment firm of Salomon Bros.

In corporate trading, industrials rose 5/8 and utilities rose 3/8 point in light trading.

Among tax-exempt municipal bonds, general obligations rose point and revenue bonds were up 3/8 point. Trading was moderate.

Yields on three-month Treasury bills were up 1 basis point to 5.37%. Six-month bills were unchanged at 5.40% and one-year bills were off 3 basis point at 5.40%.