FINANCIAL MARKETS : Dow Up 18 on Wave of Enthusiasm : Market Overview

Stocks were swept higher by a wave of enthusiastic buying that lifted blue chips and boosted the NASDAQ composite index to its eighth record close in nine sessions. The Dow Jones industrials gained 18.65 points to 3,307.33.

A further rally in Treasury bonds pushed long-term yields to a two-month low, as investors’ fears about the incoming Clinton Administration continued to wane.

The dollar fell sharply in extremely thin trading.

Stocks

“You can’t keep a good market down,” said Bobby O’Toole, head of NASDAQ trading at Lehman Bros., explaining the widening rally on Wall Street in recent weeks. “I see a lot of new money coming in.”

Investors are growing more upbeat about corporate earnings for 1993 and less worried that President-elect Bill Clinton’s expected economic stimulus package will fire up inflation, experts say.

Advancing issues topped losers by about 9 to 5 on the New York Stock Exchange and by 12 to 8 on the NASDAQ market. NYSE volume came to 220.14 million shares against 234.96 million Friday.

Broad market indexes, including the NASDAQ composite and the Standard & Poor’s 500, again reached all-time highs.

Though analysts keep looking for signs that the market rally is running out of steam, many say that the renewed drop in bond yields is helping to guarantee that stocks’ momentum will continue at least through year-end.

Among the market highlights:

- Tech stocks’ powerful advance continued, especially in the software area. Computer Sciences jumped 1 5/8 to 78 1/2, Oracle gained 1 1/8 to 24, FileNet rose 1 1/4 to 22 1/2, Cadence Design added 1 3/4 to 22 3/8 and Microsoft leaped 1 5/8 to 93 3/8.

- Restaurant stocks also were big gainers. Showbiz Pizza rose 1 5/8 to 33 1/8, Shoney’s added 1 1/8 to 25 1/8, Lonestar Steak rocketed 2 3/4 to 34 1/2 and Foodmaker, which owns Jack-in-the-Box, rose 3/4 to 12 1/4.

- On the downside, most airlines tumbled after brokerages Goldman Sachs and Merrill Lynch reduced their 1993 expectations for profit growth. AMR, parent of American, sank 2 to 63 1/8, Delta dropped 1 7/8 to 51 3/4, and UAL, parent of United, fell 2 3/4 to 119 5/8. But Southwest, one of the industry’s few bright spots, rose 1 1/8 to a record 29 3/8.

- Among blue chips, American Express and W. R. Grace both advanced on word that their chief executives are retiring. Neither individual is particularly well-liked on Wall Street. AmEx rose 1 3/8 to 24 3/4 and Grace 1 1/4 to 39.

- Though the small-stock market continues to be where the market action is, it showed Monday why it isn’t for the faint of heart. American Dental Laser soared 4 1/8 to 9 3/4 after the government allowed the firm to begin marketing a new device that can replace drills.

Meanwhile, Eagle Hardware plummeted 6 5/8 to 26 3/4 after the retailer announced a $2.4-million charge because of unexplained shrinkage in inventories.

Other small stocks moving sharply included lingerie maker Body Drama, up 1 3/8 to 5 1/4, and Viking Office Products, up 1 5/8 to 29.

Overseas, Hong Kong’s slump continued, as the Hang Seng index sank 76.35 points to 5,191.75. At midday today it was off another 65.77 points to 5,125.98.

Tokyo’s Nikkei average eased 88.57 points to 17,207.12, while London’s Financial Times 100 index lost 4.9 points to 2,754.5 and Frankfurt’s DAX average added 3.16 points to 1,525.32.

Credit

Bond investors pushed yields lower again after President-elect Clinton told college students in Chicago that economic figures seem to indicate that the nation is coming out of the recession.

The economy’s gains are allaying fears that Clinton will propose new federal spending that could sharply expand the federal debt.

The yield on the Treasury’s main 30-year bond fell to 7.45% from 7.48% Friday. It now is the lowest since 7.41% on Oct. 6.

Also helping bonds are expectations that the government’s reports on November consumer prices, due Friday, will show that inflation remains under control.

The fed funds rate, the rate on overnight loans between banks, was 2.50% versus 2.88% Friday.

Other Markets

The dollar plunged despite renewed optimism about the U.S. economy. Traders said activity was thin and is becoming unpredictable because of seasonal factors.

In New York, the dollar plummeted to 1.556 German marks from 1.593 on Friday. It also fell to 123.75 Japanese yen from 124.93.

Dealers said an unexpected sharp rebound in the Swiss franc--despite Switzerland’s vote Sunday rejecting closer ties to the European Community--tipped the dollar into the technical correction.

Late Monday in New York the dollar was quoted at 1.394 Swiss francs, down 2.4% from 1.428 on Friday.

Meanwhile, on New York’s Comex, near-term gold futures settled at $336.10 an ounce, up 40 cents from Friday. Silver settled at $3.75, flat on the day.

Light, sweet crude oil for January gained 24 cents to $19.18 a barrel on the New York Merc.

Market Roundup, D10