STOCKS : Dow Rebounds 11.38 as Traders Hunt Bargains

Stock prices rebounded modestly Tuesday following Monday’s 53.71-point drop in the Dow Jones industrial index, as late bargain hunting and computer-program buy orders gave some direction to an otherwise lackluster session.

The Dow index of 30 industrials rose 11.38 to 2,893.56.

“There’s certainly bargain hunting,” said William LeFevre, market strategist at Advest. “People are jumping into the void.”

But many investors hung back, trying to gauge the market’s direction. Big Board volume totaled 134.93 million shares, up slightly from Monday’s 133.47 million.

In the broader market, advancing issues outnumbered losers on the New York Stock Exchange, with 778 up, 708 down and 519 unchanged.

The market fluctuated in a narrow range for much of the day, breaking free in the afternoon.

Analysts said some stocks may have fallen to unrealistically low prices on Monday, and the fall induced bargain hunting.

George Pirrone, senior trader at Dreyfus, said that he was not bothered by Monday’s action and that a recovery is in sight.

“Everybody got very panicky (Monday), but keep in mind that we’ve come from 2,600 and staged a rally of over 300 points (since spring). If they cracked 2,800 I would get worried,” he said.

“It’s been pretty quiet action. Basically the market is just buying time,” said Jon Groveman, analyst at Ladenburg, Thalmann & Co.

Program trading helped push the market up in the closing hours as arbitragers tried to take advantage of differences between stock index futures and the cash value of the stocks that make up the index, said Thomas Walsh, head of equity trading for Nikko Securities Co.

Occidental Petroleum, whose debt and preferred stock were downgraded by Standard & Poors late Monday, was the most active stock on the NYSE, down 5/8 at 26. Occidental denied rumors that it plans to lower its $2.50-per-share annual dividend.

Motorola dropped 7/8 to 85 on news that the company was ordered by a judge to stop shipments of its best-selling computer chip, an order later rescinded.

Software Toolworks of Chatsworth rebounded 1 1/2 to 20 1/2, after falling 4 7/8 Monday because of a negative story in Barron’s. The stock was the most active over-the-counter issue.

Newport Pharmaceuticals of Newport Beach was the biggest percentage gainer on the OTC market, up 13/16 to 3-10/16, a 29% rise. The company scheduled a press conference Thursday to discuss new findings about a drug that may delay the progression of AIDS in infected people.

Nike fell 1 to 75, despite declaring a 2-for-1 stock split and announcing that it plans to list on the New York Stock Exchange. The stock is traded over the counter.

In Tokyo, stocks fell as Monday’s decline on Wall Street scared most investors off to the sidelines. The 225-share Nikkei index ended down 336.42 at 32,040.38.

In London, prices finished little changed. The Financial Times 100-share index slipped 0.8 to 2,369.7.

In Frankfurt, shares rose strongly in lively trading as foreign buying interest hit an otherwise empty market, prompting domestic buying, dealers said. The 30-share DAX index rose 39.32 to 1,836.74.

CREDIT: Bond Traders Ignore Housing Start News

Bond prices slipped in the credit markets as the market shrugged off news that growth in the nation’s housing market dropped to its slowest pace since the last recession.

The Treasury’s key 30-year bond lost 7/32 point, or $2.19 per $1,000 in face amount. Its yield rose to 8.47% from 8.46% Monday.

The market did not have the expected reaction to the Commerce Department report that housing starts fell 1.4% in May to the lowest level since October, 1982.

Usually, signs of economic weakness lead to an upturn in bond prices on the belief that the news will prompt the Federal Reserve to lower interest rates. Falling rates can boost the value of fixed-return investments such as bonds.

The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.125%, down from 8.25%.

CURRENCY: Technical Factors Push Dollar Down

The dollar continued to fall against most major foreign currencies in a market once again dominated by technical factors.

There was no news to affect foreign exchange dealings, and analysts said the dollar’s slide was caused by technical factors, which also brought the U.S. currency lower on Monday.

The British pound rose to a 15-month high against the dollar in London, a move dealers said was helped when sterling broke above a chart level of $1.7150.

The pound rose to $1.7198 from $1.7130 late Monday in London. In later New York trading, the pound rose to $1.7225 from $1.7145.

In Tokyo, the dollar closed at 153.72 yen, down 0.16. Later in London, the dollar was quoted at 153.65 yen, and in New York, it fell to 153.485 yen from 153.65.

COMMODITIES: Orange Juice Futures Extend Heavy Selloff

Speculators continued to sell heavily into the orange juice futures market Tuesday, extending to three days a collapse that analysts attribute almost entirely to bearish chart patterns.

On other commodity markets, oil and pork futures extended recent losses; cattle futures advanced; grains and soybeans were mixed, and precious metals retreated.

For the third straight day, all contracts for September, 1990, through May, 1991, delivery of frozen concentrated orange juice fell the permitted daily limit of 5 cents on the New York Cotton Exchange. The limitless nearby July contract plunged 9.6 cents to $1.667 a pound, the lowest close since Dec. 29, the last trading day of last year.