Dow Up 22; Dollar Gains Overseas : Market Overview

The stock market followed through on last week’s rally with a moderate advance amid more signs that the economy is continuing its recovery.

* The dollar continued its rally, benefiting from turmoil among European currencies and more favorable news about the U.S. economy.

* Treasury bond interest rates increased on the signs of economic recovery.

Stocks

Analysts said the market continued to benefit from expectations of a strengthening economy without any immediate revival of upward pressures on inflation and interest rates.

The Dow Jones average, up 53.22 points last week, rose another 22.15 points to 3,332.18. In the broader market, advancing issues outnumbered declines by about 9 to 5 on the New York Stock Exchange. Big Board volume came to 238.57 million shares, down from Friday’s 247.20 million.

The market was also bolstered by gains in secondary stocks. The NASDAQ index rose 5.48 points to end at 701.82.

The earliest news of the day came from the National Assn. of Purchasing Management, which said the American manufacturing sector expanded in January for the fourth straight month, paced by strong increases in production and new orders. That growth came despite high-profile layoffs and cutbacks announced by some big corporations.

Separately, the government said construction spending was unchanged in December, helping to hold annual outlays to a 6.2% gain, the largest increase in six years.

Analysts also noted that the “Superbowl barometer”--which holds that if a National Football Conference team wins the Superbowl, stocks will rise for the year--called for bullish sentiment.

The NFC’s Dallas Cowboys won on Sunday in what analysts might call a broad-based rally, 52-17.

“It’s been correct 88.5% of the time,” said Robert Stovall, president of Stovall/21st Advisers.

Among the market highlights:

* American Express was actively traded, up 1 3/8 to 24 5/8 after the weekend news that James D. Robinson III had resigned as chairman after a revolt by shareholders and board members.

The company on Monday named a director, Richard M. Furlaud, as non-executive chairman to succeed Robinson.

* RJR Nabisco, the volume leader, rose 5/8 to 8 7/8 after a Wall Street Journal report that the company was considering creating a separate class of stock representing its food business.

* Other gainers among the blue chips included Philip Morris, up 1 1/8 to 75 7/8; General Motors, up 3/8 to 38 1/8; International Business Machines, up 1 1/8 to 52 5/8, and Goodyear Tire & Rubber, up 1 to 69.

But pharmaceutical stocks remained on the defensive as investors wait for the Clinton Administration’s health care reform plan. Merck, a Dow component, fell 1 1/2 to 38 7/8; Eli Lilly 1/2 to 56; Bristol Myers-Squibb 1/4 to 59 1/2, and Syntex 3/4 to 20 3/8.

* Motorola regained some ground, up 2 3/4 to 53 3/4 after Friday’s selloff on concern about alleged health hazards from using cellular telephones. McCaw Cellular rose 7/8 to 33 3/8.

* Leslie Fay tumbled 4 5/8 to 7 3/8. The apparel manufacturer said it was looking into alleged accounting irregularities that could result in a restatement of its 1991 earnings and the elimination of any profit for 1992.

* Securities-industry stocks were broadly higher, aided in part by news of booming demand for mutual-fund shares. Merrill Lynch climbed 3 3/8 to 68 3/8; PaineWebber rose 1 7/8 to 27 1/4; Morgan Stanley gained 2 3/8 to 59; Primerica added 1 to 54 1/8, and Charles Schwab Corp. ended up 2 1/2 at 32 3/4.

* Insurance stocks also were strong. Aetna Life & Casualty rose 1 3/4 to 52 1/4; Cigna 2 3/8 to 64 3/8; Travelers gained 5/8 to 29 1/2, and Capital Re 1 5/8 to 25 5/8.

* Firmer technology stocks included Intel Corp., up 4 1/2 to 111 1/4, Apple Computer, ahead 1 3/4 to 61 1/4, Microsoft, up 1 to 87 1/2, and Dell Computer, up 2 3/4 to 49.

Overseas, shares rallied on the London stock exchange as the Financial Times 100-share average soared 44.4 points to 2,851.6. Frankfurt’s 30-share DAX average rose 13.31 points to close at 1,585.16. Tokyo’s 225-share Nikkei average closed at its day’s high, up 109.86 points at 17,133.64.

Currency

Foreign-exchange dealers were focused once again on European goings-on.

Over the weekend, Ireland devalued the punt, making it the fifth European Community currency to either drop out from or be devalued in the EC’s supposedly currency-stabilizing grid.

Rumors also were rife that Britain would lower interest rates.

The result--a rush to the safe-haven dollar, which closed in New York at at 1.636 German marks, up from 1.611 marks late Friday. It rose to 125.05 Japanese yen from the previous sessions’ 124.65 yen.

The British pound was quoted at $1.460, down from Friday’s $1.487.

Credit

The bond market did not like the purchasing managers report because signs of economic growth are usually inflationary. Inflation eats at the value of fixed-income investments such as government securities.

The Treasury’s main 30-year bond yield edged up to 7.20% from 7.19%. The key bond’s price was down 5/32 point, or $1.56 per $1,000 in face amount. Bond prices and yields move in opposite directions.

The federal funds rate, the interest on overnight loans between banks, was 3.125%, up from 2.938% late Friday.

Commodities

Crude oil rose 5 cents to $20.31 a barrel in cautious trading on the New York Mercantile Exchange.

Gold rose 10 cents to $330.30 an ounce on New York’s Commodity Exchange. March silver rose 1.5 cents to $3.675 an ounce.

Market Roundup, D8