Dow Up 113 in Broad Advance; Tokyo Rebounds

Blue-chip stocks on Monday staged their strongest rally since Dec. 1 amid optimism that Wall Street might soon shake off its Asian blues.

The Dow Jones industrials gained 113.10 points, or 1.5%, to 7,792.41 in a broad rally that also lifted the battered Nasdaq composite index 1.7%, to 1,537.45.

Today in Tokyo, Japanese stocks closed out their final session of 1997 with a sharp rally as well. The Nikkei-225 index gained 483.52 points, or 3.3%, to 15,258.74 after hitting a 2 1/2-year low Monday.

But concerns about Asia’s potential depressant effect on the world economy pounded certain commodities: Copper fell to four-year lows and oil prices dropped to nearly two-year lows.

On Wall Street, stocks were helped by news that major international banks agreed to push back the due date on billions of dollars in South Korean loans maturing in coming weeks.

The move is aimed at giving beleaguered South Korea more breathing room as it scrambles to restructure its economy in the wake of East Asia’s devastating stock, currency and banking system meltdowns this year.

Worries that Asia’s woes might spread worldwide have pounded the U.S. stock market in recent weeks, so “any attempt at a solution to Asia’s credit crisis is viewed as good news” now, said Robert Doll, money manager at OppenheimerFunds Inc. in New York.

Asia’s turmoil has helped hold the U.S. market back from its traditional year-end rally, known as the “Santa Claus” rally. Stocks often gain in the final weeks of the year as tax-related selling abates and as investors grow hopeful about a continuing market advance in the new year.

“For the moment, people feel better about overseas markets, and it’s that time of year when selling pressure comes off” in any case, said Marshall Acuff, strategist at Salomon Smith Barney Holdings.

What’s more, many investors know that January tends to be a strong month for cash inflows to mutual funds, as investors put holiday bonuses to work and as companies make contributions to employee retirement plans.

Wall Street’s bulls insist that the U.S. economy won’t be severely hurt by Asia’s economic mess and that the fundamentals for U.S. stocks remain positive.

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In Japan, which faces far more dire consequences because of East Asia’s trouble, the optimists still managed to hold sway on the final trading day of the year. But the Nikkei-225 index still lost 4,102 points for the year, or 21%.

By contrast, the Dow industrials have gained 21% year-to-date.

On Monday, winners topped losers by more than 2 to 1 on the New York Stock Exchange.

Winners had a much narrower edge on Nasdaq. Still, the Russell 2,000 index of smaller stocks rose 1.2%, suggesting strength in many smaller stocks.

Share prices rallied without help from the bond market, where yields were up modestly. The 30-year Treasury bond yield rose to 5.92% from 5.90% on Friday.

In commodity markets, copper prices fell to their lowest levels in four years as speculators sold heavily on the outlook for growing supplies and on worries about weaker industrial demand due to the Asian crisis.

At the Commodity Exchange in New York, copper prices followed the lead of trading in London earlier in the day, setting new life-of-contract lows for the second time in three sessions. Copper for March delivery closed 1.20 cents lower at 77.7 cents a pound.

At the New York Mercantile Exchange, crude oil prices dropped to 23-month lows on talk that Iraqi oil sales are likely to resume soon under an “oil-for-food” program backed by the United Nations, traders said.

Crude oil for February delivery closed 58 cents lower at $17.62 a barrel.

But as some Wall Streeters noted, lower commodity prices should be bullish for the U.S. economy overall by keeping inflation in check.

Among Monday’s highlights:

* Dow gainers cut a wide swath across all major sectors. AlliedSignal jumped $2.44 to $38.25, Procter & Gamble added $2.19 to $79.81 and J.P. Morgan advanced $2.19 to $113.63.

* Technology issues rebounding included Microsoft, up $5.56 to $126.31; Dell Computer, up $4.50 to $82.88; IBM, up $1.06 to $102.75; and Cisco Systems, up $2.81 to $56.

* Financial stocks were helped as South Korea’s crisis eased somewhat. Citicorp shot up $3.94 to $125.88, BankAmerica gained $1.50 to $72.31 and Bankers Trust added $2.88 to $114.50.

* Oil-related stocks rose despite lower crude prices. Chevron jumped $2.19 to $77.50 and Western Atlas gained $2.25 to $69.81.

* Some retail issues jumped, including Nordstrom, up $3 to $58.88, and Sears, up $1.50 to $43.38.

* Utility stocks continued to be “safe haven” issues. The Dow utility index rose 0.9% to a record 270.01.

The dollar, meanwhile, fell to 129.30 Japanese yen in late New York trading Monday from 130.41 in Friday’s holiday-shortened session after Eisuke Sakakibara, Japan’s vice finance minister for international affairs, said his country is determined to stop excessive yen weakness and that, if need be, could intervene.

Today in Tokyo, the dollar closed the year at 129.75 yen.

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* WINNERS AND LOSERS: The best- and worst-performing stock sectors in 1997. D4