Wave of Selling Sends the Dow South of 3,800 : Markets: Higher bond market yields are blamed as the average gives up 45.75 points.

Investors dumped stocks Monday, pulling the Dow Jones industrial average down nearly 46 points amid concern that this year’s interest rate hikes will draw investors into the bond market and out of stocks.

The Dow, the market’s best-known indicator, ended the day with a loss of 45.75 points, or 1.20%, at 3,769.51, its lowest closing since Aug. 22. The average had not closed below 3,800 since Oct. 7.

Analysts said the bond market’s higher yields have made fixed-income securities an increasingly attractive alternative to the risks of the stock market.

The blue-chip index rose as much as 18 points in the first 30 minutes of trading, but it fell to post modest losses for most of the session as Treasury bond prices deteriorated, pushing up yields.

When the Dow broke below the critical 3,800 level, it was a signal for other investors to step in with sell orders.

A wave of late selling pushed the Dow down more than 50 points, a threshold that prompted the New York Stock Exchange to restrict high-volume computerized trading.

Ironically, bond yields ended unchanged Monday. The 30-year bond yield closed at 8.12%, the same as Friday’s close. Its price edged up 1/32 point, or 31 cents per $1,000 in face value.

Three-year Treasuries are yielding 7.52%, while five-year notes are yielding 7.80%.

In the broader market, declining issues outnumbered those rising by about 15 to 8 on the New York Stock Exchange. Volume was moderate ahead of the Thanksgiving holiday, with 293 million shares changing hands, up from 252.30 million last Monday.

Broad market indexes also fell. The NYSE’s composite index declined 1.72 points to 250.58. The Standard & Poor’s 500-stock index slid 3.18 points to 458.29. The Nasdaq composite of mostly smaller companies lost 6.93 points to 757.74. And the American Stock Exchange market value index fell 2.76 points to 441.28.

Analysts said the stock market was still troubled by last week’s Federal Reserve Board move to boost short-term interest rates by a steep three-quarters of a percentage point to curb inflation pressures.

The Organization for Economic Cooperation and Development further unnerved traders Monday with a statement saying the United States must raise interest rates substantially over the next year to contain inflation and keep the economic expansion on track.

The Paris-based OECD acts as a think tank for rich industrial countries.

Among the market highlights:

* Of the 30 Dow components, eight stocks lost a point or more. United Technologies fell 1 5/8 to 57 3/8, J.P. Morgan slid 7/8 to 57 1/4, Eastman Kodak lost 1 3/8 to 47 1/4, Philip Morris dropped 1 1/4 at 61 1/2, and American Express fell 1 1/4 to 29 3/8.

* Technology stocks outperformed the rest of the market. Intel rose 2 3/16 to 66 1/8 after Merrill Lynch raised its rating on the stock. Other chip makers were strong, including Micron Technology, up 3/4 to 40 5/8.

* Kemper tumbled 6 3/8 to 42 1/4 after Kemper and Conseco Inc. said Sunday that they had mutually agreed to end a $2.4-billion merger agreement. Conseco surged 3 to 40 3/8.

Oil stocks ended mixed after the Organization of Petroleum Exporting Countries said it was considering a freeze on current output levels.

* Dow component Chevron rose 1 1/8 to 43 3/4 after First Boston upgraded the stock to “buy” from “hold.” Texaco gained 1/4 to 61 7/8.

* Chiron surged 2 to 80 1/4 in Nasdaq trading after Ciba-Geigy, the Swiss drug company, confirmed that it will acquire a 49.9% stake in Chiron.

Overseas stock markets were mixed. Tokyo’s 225-share Nikkei average ended down 180.84 points at 19,121.72. Frankfurt’s DAX average closed up 5.05 points at 2,105.28, and London’s Financial Times average closed down 10 points at 3,121.

Elsewhere, the dollar was mixed, closing in New York at 1.557 German marks, up from 1.555 marks Friday. It also ended at 98.36 Japanese yen, down from 98.53.

Market Roundup, D12