Dow Continues Upward, Gains 12.7 : Market Overview

* Stock prices pushed ahead, adding to their strong gains of the past two sessions even without much encouragement from the bond market. The Dow Jones average of 30 industrials, up 96.99 points Tuesday and Wednesday, rose another 12.70 points to 3,391.89.

* Treasury bond prices ended mixed after another volatile session, with long-term bonds falling first in reaction to mixed economic data and then recovering on bargain-hunting.

* The dollar fell in late trading, weakening on a senior Federal Reserve official’s comments that suggested the central bank was reluctant to buy dollars to support the U.S. currency.

Stocks

Analysts said the stock market’s ability to avoid large scale profit-taking after this week’s jump had attracted new buyers.

Advancing issues outnumbered declines by almost 3 to 2 on the New York Stock Exchange. Big Board volume came to 193.41 million shares, down from Wednesday’s six-month high of 275.85 million.

Stock prices were weaker in early trading, hit by scattered profit-taking. But the market improved in the afternoon, helped by futures-linked buying.

Economic reports released Thursday showed a drop of 21,000 in weekly initial jobless claims in the latest week, and a 7.9% rise in new home sales in June.

The market reacted to those figures instead of gloomy news on the second-quarter gross domestic product, which showed a dismal gain of 1.4% at an annual rate. Traders said the figures were old news since the period ended in June.

Among the market highlights:

* International Business Machines gained 1 to 95 3/8. In a meeting with analysts, the company said it is looking for U.S. revenue growth of from 4% to 6% annually through 1994.

The Dow also derived a good measure of its gain from the three oil stocks among its components--Exxon, up 1 3/8 at 63 3/8; Texaco, up 7/8 at 64 1/8, and Chevron, up 1 at 70 3/4.

* Other gainers among the blue chips included Goodyear, up 1 1/8 at 67 3/8; Merck, up 5/8 at 51 7/8; J. P. Morgan, up 1/4 at 60 1/8, and International Paper, up 5/8 at 66 1/2.

* Equimark climbed 1 1/8 to 6 5/8 in active trading. Integra Financial, another bank holding company, agreed to acquire Equimark through an exchange of stock.

* Alliant Techsystems, which reported lower quarterly profits from continuing operations, fell 1 3/4 to 21 3/8.

* UAL rose 3 1/2 to 114 after the airline holding company, as expected, posted a large second-quarter loss.

* Some issues that dropped earlier in the week on initial disappointment over earnings results rebounded Thursday. Ford Motor, for example, climbed 1 1/4 to 45 1/2, and Xerox was up 2 1/4 at 75 7/8.

* Utility stocks, which are prime beneficiaries of falling long-term interest rates, were well represented again on the list of issues at 52-week highs.

* Central & South West rose 3/8 to 30; Kansas City Power & Light gained 1/8 to 23 7/8; Southern Co. was up 1/8 to 37 1/4; American Electric Power added 1/8 to 34 1/2, and FPL Group, the holding company of Florida Power & Light, gained 1/4 to 37 5/8.

* Among technology issues traded in the NASDAQ market, Lotus Development rose 1/4 to 17 7/8; Dell Computer added 1 to 20 5/8; MCI Communications gained 1/2 to 34 1/8, and Cirrus Logic rose 3/4 to 22 5/8.

Meanwhile, in overseas trading, Tokyo stocks jumped and the 225-share Nikkei average closed 459.65 points or 3.04% higher at 15,555.60. Frankfurt’s 30-share DAX average dipped 4.16 points to 1,623.99 at the close. On the London Stock Exchange, the Financial Times 100-share average ended down 11.6 points at 2,411.6.

Credit

The price of the Treasury’s bellwether 30-year bond rose 3/16 point, or $1.87 per $1,000 in face amount. Its yield, which falls when prices rise, was 7.42%, down from 7.44% Wednesday.

The 30-year bond started the session down 9/32 point as investors took profits following a nearly 2-point run-up earlier this week.

The long bond fell another 10/32 after the government reported the larger-than-expected decline in jobless claims.

Also, the new home sales figures provided the market with another sign that the economy is improving--potentially bad for bonds.

But late in the day, bargain-hunters again moved into the bond market, pushing long-term bond prices up and their yields down. However, medium-term securities continued to take losses.

The federal funds rate, the interest on overnight loans between banks, rose to 3.188%, up from 2.875% late Wednesday.

Currency

Foreign exchange dealers said the dollar traded in a narrow range through most of the day but fell in New York in the late afternoon on reports of comments by David Mullins, a vice chairman of the Federal Reserve.

Mullins told a group of securities dealers in New York that the dollar’s value should be “set in the market by market fundamentals” and shouldn’t be manipulated.

In New York, the dollar fell to 1.478 German marks and 127.50 Japanese yen, down from 1.482 marks and 127.80 yen, respectively, on Wednesday.

The British pound was strengthened to $1.926 from $1.922 Wednesday.

Commodities

Wheat futures prices on the Chicago Board of Trade fell to their lowest levels since December as the prospect for export business remained bleak.

The wheat selloff spilled over to corn and soybeans.

On other markets, livestock and meat gained; energy prices fell; precious metals were higher; coffee rallied, and cocoa futures climbed.

September light, sweet crude oil closed 17 cents lower at $21.83 a barrel on the New York Mercantile Exchange.

Gold futures were unchanged at $356.50 an ounce on New York’s Commodity Exchange. September silver settled 2.9 cents higher at $3.932 an ounce.