New Year Rally Resumes; Dow Climbs 21.38 to Hit Still Another Record

The stock market kept climbing to record highs Monday, starting February the way it spent most of the first month of 1987.

Analysts said signs of a strengthening economy helped keep the market in high gear, even in the face of some upward pressure on interest rates.

The Dow Jones average of 30 industrials, up 262.09 in January, gained an additional 21.38 to 2,179.42. Most other broader market indicators also finished the day at new peaks.

Volume on the New York Stock Exchange reached 177.36 million shares, up from 163.36 million Friday. Analysts said the market’s sharp gains in January, which some observers regard as a trend-setting month, had stirred up plenty of enthusiasm.

Among actively traded blue chips, General Motors rose 2 5/8 to 77 7/8 and International Business Machines gained 3 1/2 to 132. But American Telephone & Telegraph lost 1/2 to 24.

Semiconductors stocks rose sharply in response to analysts reaffirming their belief that orders were up in January. Texas Instruments gained 4 3/8 to 146, Intel 3 1/2 to 34 3/4, Motorola 2 1/8 to 47 3/8 and National Semiconductor 3/4 to 14 1/2.

Heritage Communications climbed 3 3/4 to 32 1/2. An investment group made an offer of $32 a share in cash and stock to take the company private.

Viacom International rose 2 1/2 to 43 7/8. Arsenal Holdings, a unit of National Amusements Inc., said it offered to acquire Viacom for $44.75 a share in cash and stock, topping a bid proposed by Viacom management.

Compaq Computer, which posted a sizable quarterly earnings increase, gained 2 3/8 to 26.

Large blocks of 10,000 or more shares traded on the NYSE totaled 3,423, compared to 3,175 on Friday.

In the credit markets, bond prices moved lower Monday, as the dollar weakened further in foreign exchange trading and the credit markets awaited a massive new sale of Treasury securities.

The 30-year Treasury bond dropped about 13/32 of a point, or about $3.75 per $1,000 in face amount, with its yield rising to 7.51% from 7.47% late Friday.

Corporate and municipal bonds also fell slightly.

Depressing bond prices, which move in the opposite direction of interest rates, was the impending quarterly Treasury auctions of $29 billion, which begin Tuesday with the sale of $10 billion in three-year notes.

The steep drop of the dollar in foreign exchange over the past several weeks has increased speculation that foreign investors will not participate in this week’s auctions as heavily as in previous quarterly refundings.

The dollar declined further on Monday, partly on profit taking following a runup Friday on better-than-expected figures showing a $10.7-billion U.S. trade deficit in December.

The federal funds rate, the interest on overnight loans between banks, traded at 6.313%, up from 6.25% Friday.

In the secondary market, prices of short-term issues fell by 1/32 to 3/32 of a point, intermediates were off 3/16 point and 20-year issues were down 7/16 point, according to the investment firm Salomon Bros.

The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.

In the corporate bond market, industrials and utilities were down point in light trading.

Among tax-exempt municipal issues, general obligation bonds and revenue bonds declined point. Trading was light.

Yields on three-month Treasury bills were unchanged at 5.59%. Six-month bills fell 3 basis points to 5.56% and one-year bills were down 1 basis point at 5.60%.