NEW YORK — Stock prices posted their second straight gain Thursday, continuing their bid to recover from the market's early July selloff.
Steel stocks, however, came under pressure after LTV Corp. sought Chapter 11 protection under the U.S. Bankruptcy Code. LTV tumbled 2 to close at 2 1/8, leading the active list on turnover of more than 6.2 million shares.
The Dow Jones average of 30 industrials rose 7.60 to 1,781.78. In the last two trading days, the average has recovered 13.08 points after falling 140.33 in the previous eight sessions.
Volume on the New York Stock Exchange dropped off to 132.29 million shares from 160.81 million on Wednesday.
Among other leading stocks in the steel industry, Inland Steel fell 2 to 16 7/8, Bethlehem Steel fell 1 to 12 1/8 and USX--the recently renamed U.S. Steel--dropped to 18 3/8.
Elsewhere in the market, analysts said a few individual stocks were responding to upbeat earnings reports for the second quarter. Traders also appeared to be doing some selective shopping for "bargains" after the steep decline in stock prices that began two weeks ago.
However, broad measures of economic activity continued to show the sluggishness that contributed to the market's drop earlier in the month.
The Commerce Department reported that housing starts dropped 0.8% in June to their lowest level since November, 1985. So far in 1986, housing has been one of the strongest sectors of the economy.
The Dow Jones industrial average would have been about unchanged for the day had it not been for one of its component stocks, American Can, which jumped 9 1/2 to 85. The company agreed to sell its packaging business to Triangle Industries. Triangle's stock gained 2 3/4 to 24 5/8.
Associated Dry Goods rose 2 3/8 to 61 1/8 and May Department Stores was up 1 7/8 at 73 3/4 as investors assessed the two companies' planned merger.
International Business Machines, after a brief rally early in the day, dropped 1 1/8 to 132. The stock has fallen 11 3/8 points this week since the company reported lower-than-expected quarterly earnings Monday.
Diamond Shamrock Climbs
American Telephone & Telegraph, which reported slightly lower second-quarter earnings, slipped to 23 3/4.
Diamond Shamrock was up 1 1/8 at 11. The company said directors authorized it to buy back as many as 25 million shares of its stock over the next two years.
In the overall tally on the Big Board, advancing issues outnumbered declines by more than four to three.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 156.94 million shares.
Standard & Poor's index of 400 industrials rose 1.33 to 261.10, and S&P's 500-stock composite index was up 1.06 at 236.07.
Credit markets turned in a mixed performance but some actively traded government bonds actually improved late in the day despite news of an unexpected surge in the nation's basic money supply.
The benchmark 30-year Treasury bond ended the day off 11/32 point, which pushed its yield to 7.19% from 7.16% late Wednesday. Earlier in the session, the closely watched bond had been down as much as 5/8 point, or $6.25 for each $1,000 in face amount.
Dealers took in stride a Federal Reserve Board report that the M1 money measure jumped $7.4 billion in the week ended July 7, said William V. Sullivan Jr. of Dean Witter Reynolds in New York.
The bond market also had little reaction to the housing starts report.
In the secondary market for Treasury securities, prices of short-term governments ranged from down 1/32 point to up 1/16 point and intermediate maturities ranged from up 1/32 point to down 1/8 point, according to the investment firm of Salomon Bros.
The firm said the 20-year bond, down nearly a full point at midday in New York, closed off point.
In corporate trading, industrials edged down 1/8 and utilities fell 3/8 point in moderate activity. Among tax-exempt municipal bonds, revenue bonds dipped point and general obligations were unchanged in medium trading volume.
Yields on three-month Treasury bills fell 3 basis points to 5.73%. Six-month bills held at 5.8%. One-year bills were up 1 basis points, or one-hundredth of a percentage point, to 5.84%.
The federal funds rate traded at 6.375%, compared to 6.5% late Wednesday.