Dow Above 8,700 For First Time

Stocks resumed their rally Monday, boosting the Dow Jones industrial average to a 10 percent gain for the year, as investors drew encouragement from a confident assessment of the market by Warren Buffett.

The Dow Jones industrial average rose 116.33 to 8,718.85, topping last Wednesday’s record of 8,675.75 and moving above 8,700 for the first time.

With Monday’s advance, the Dow has risen more than 800 points, or 10.2 percent, in 1998.

The session began on an upbeat note amid news that Buffett, in an annual report to shareholders in his Berkshire Hathaway investment company, had said “there is no reason to think of stocks as generally overvalued,” thanks largely to a sharp drop in interest rates over the past year.

“He’s widely followed. I’d put him in the same category as Alan Greenspan,” said Richard A. Dickson, a technical analyst at Scott & Stringfellow in Richmond, Va., noting the Federal Reserve chairman’s ability to move the market whenever he speaks publicly.

Stocks also drew a boost on Monday from an improvement in interest rates in the bond market, where long-term borrowing costs continued to ease.

Advancing issues outnumbered decliners by a 3-to-2 margin on the New York Stock Exchange, where volume totaled 548.98 million shares, down from 597.80 on Friday.

Some of the stocks that moved substantially or traded heavily Monday:

NYSE

Iomega, down 1-1/2 at 7-1/8.

The maker of computer disk drives warned that it will post an unexpected first-quarter loss of between $10 million and $25 million.

McDonald’s, down 1-5/8 at 53.

Less than a year after disclosing a sizable position in McDonald’s, Buffett revealed that he has sold at least several hundred million dollars worth of the stock.

NASDAQ

WorldCom, up 2-11/16 at 41-7/8.

Salomon Smith Barney reinitiated coverage of WorldCom with a “strong buy” rating, Dow Jones News Service reported.

Applied Microsystems, up 2-3/4 at 8-9/16.

The company signed an agreement to license and distribute Microsoft’s Windows CE operating system. Applied Microsystems, based in Redmond, Wash., develops computer debugging and testing tools.

Morrow Snowboards, down 11/16 at 1-9/16.

Morrow, based in Salem, Ore., expects a loss due to charges to accounts receivable and write-offs.