Oil Stock Rally Fuels a 26.38 Surge by Dow : Market Overview

Highlights of Monday’s market activity, compiled from Times staff and wire reports:

* Blue chip stocks closed near the day’s highs, fueled by a rally among oil stocks as crude prices rose again. The Dow Jones industrials shot up 26.38 points to 3,275.49.

* Bond yields closed mixed, failing to respond much to the rising oil market, which normally would be negative for bonds because of the inflation implications.

Stocks

The market surprised analysts with a broad-based surge, a big improvement over last week’s poor performance. Computerized buy programs helped, and many investors appeared optimistic ahead of the first wave of quarterly earnings reports.

Smaller stocks rose sharply. The NASDAQ composite index rebounded from a three-day losing streak, up 6.28 points to 596.29.

“People are reacting favorably across the board to the data they expect out later this week,” said Ron Doran, director of institutional trading at C. L. King & Associates.

In the broader market, advancing issues outnumbered declining ones by about 3 to 2 on the New York Stock Exchange. Big Board volume retreated to 179.91 million shares from Friday’s 202 million.

Still, the ratio of stocks hitting 52-week lows to those hitting new highs--a key indicator of sentiment--again tipped down: 119 to 42 on the NYSE.

Analysts were loathe to place too much emphasis on the Dow’s advance. As oil shares are often the last industry sector to rally, their current strength could herald a change of direction for the market in the near future.

The Dow breached resistance at 3,275 earlier but could not march onward. Analysts say 3,300 remains the upper end of the range until investors gauge the strength of earnings growth.

Among the market highlights:

* Oil stocks rocketed, following up Friday’s big rally, as oil closed at a four-month high of $20.45 a barrel, up 16 cents.

Several analysts repeated buy ratings on the oil sector, encouraged by improving supply-demand factors and worries over possible Libyan reprisals after the United Nations slapped sanctions on that oil-producing nation.

Arco soared 4 7/8 to 106 3/4, Texaco jumped 2 to 61, Unocal rose 1 1/2 to 22 3/4, Exxon gained 1 7/8 to 57 3/4 and USX-Marathon rose 1 3/8 to 22 1/8.

Among oil-services firms, Schlumberger soared 3 1/2 to 58, Halliburton gained 1 1/4 to 24 1/2 and Baker Hughes added 1 1/8 to 17 3/4.

* Wal-Mart rose 1 1/4 to 52 7/8. Several analysts reiterated buy ratings on the retailer, saying momentum should continue despite the death Sunday of company founder and Chairman Sam Walton.

Also in the retail arena, Price Co. jumped 3 to 35 1/4, recovering somewhat from a steep plunge last week on disappointing earnings.

* Brokerage stocks roared back from last week’s selloff. Merrill Lynch jumped 2 3/8 to 53 3/8, Schwab rose 1 5/8 to 30 7/8 and Morgan Stanley added 1 5/8 to 52.

* Microsoft, which unveiled the new version of its Windows operating software for personal computers, rose 3 3/4 to 121. Also in the tech sector, Intel rebounded 3 1/8 to 57 7/8 on renewed optimism over the company’s prospects in the personal-computer chip market.

* The broad nature of the market advance showed in strong gains for an eclectic mix of stocks: Toy-maker Mattel added 1 1/4 to 35 1/8, auto-parts firm Eaton gained 2 1/8 to 73 1/4, aluminum giant Reynolds Metals soared 1 5/8 to 56 1/2 and drug firm Carter Wallace rose 6 3/4 to 98 1/4.

* L.A.-based cosmetics firm Neutrogena soared 2 7/8 to 21 7/8. A Prudential Securities analyst last week called the stock a buy.

Overseas, Tokyo’s market succumbed to Monday blues and closed down once again in listless trading. The Nikkei average fell 123.34 points to 18,436.37.

In Frankfurt, The DAX average rose 14.99 points to 1,734.62. In London, the Financial Times 100-share index climbed 18.2 points to 2,400.9.

Credit

The price of the Treasury’s 30-year bond sank a quarter point, or $2.50 per $1,000. Its yield rose to 7.89% from 7.87% Friday.

Bonds failed to react to the surge in oil prices, which normally would be considered troubling because higher oil prices could mean higher inflation.

Traders said many investors continue to focus on the likelihood of a slow-growth economy in the months ahead, which should keep downward pressure on rates.

The federal funds rate, the interest on overnight loans between banks, was 3.875%, up from 3.50% Friday.

Currency

The dollar settled mostly lower as attention focused on European currencies.

In New York, the dollar fell to 132.90 Japanese yen from 133.40 Friday. It dropped to 1.625 German marks from 1.627.

Commodities

Crude oil reached a new high for the year on the New York Mercantile Exchange as a series of refinery troubles pushed up energy futures.

Light sweet crude for May delivery rose 16 cents to $20.45 a barrel. Oil rose more than $1.10 a barrel last week as traders began to sense that the supply glut of recent months was evaporating.

Elsewhere, cocoa futures prices swung lower as traders anticipated sales by the Ivory Coast, the world’s largest producer.

The contract for May delivery ended $11 lower at $960 per metric ton on New York’s Coffee, Sugar & Cocoa Exchange.

On New York’s Comex, gold fell 80 cents to $340.40 an ounce; May silver rose 2.3 cents to $4.11 an ounce.

Market Roundup, D10