NEW YORK — Wall Street investors, cheered by a modest recovery in bond prices, went on a late stock-buying spree Tuesday that snapped the market's recent steep decline.
The Dow Jones average of 30 industrials, down 169.55 during the six previous sessions, recovered 36.72 to 2,508.16.
Volume on the New York Stock Exchange totaled 172.87 million shares, against 141.87 million Monday.
"A good rally in bonds helped stocks," said Eldon Grimm of Birr Wilson Securities.
In recent weeks, rising money-market rates have made bonds an attractive alternative to stocks. In addition, the high yields prompted banks to raise their prime lending rates last week, which also hurt the stock market.
"It's a rebound rally, but the rebound is coming from a position that could eventually prove to be the bottom," said Chester Pado of Jefferies and Co. He said the Dow could rise to 2,550, possibly 2,600 points, before running out of steam.
But brokers cautioned that the market could suffer a relapse today if the monthly U.S. trade report, due to be released before the market's opening, shows a large trade shortfall for August.
Wall Streeters generally expect monthly figures to show a narrowing of the trade deficit from the record level of $16.5 billion it reached in July. For example, economists at E. F. Hutton estimate that the gap between exports and imports narrowed to about $13 billion.
Should the data prove disappointing, analysts said it might represent a fresh problem for the currency, bond and stock markets.
At the same time, they said, a favorable surprise could work significantly to ease the interest rate and inflation worries that have beset the markets intermittently for the past several months.
International Business Machines dropped 3/4 to 148 3/4 in active trading. The company reported third-quarter earnings of $2 a share, up from $1.76 in the comparable period last year, but a shade below analysts' consensus estimate.
Honeywell, which posted a sharper increase in its quarterly profits from continuing operations, gained 1 1/8 to 77 7/8.
Electric, gas and telephone utilities, which are often sensitive to changing interest rate expectations, turned in a generally strong showing, pushing the Dow average of 15 utilities up 5.16 to 200.57.
Houston Industries rose 1 to 34; Pacific Lighting gained 1 1/2 to 59 3/4; Bell South increased 1 1/2 to 41 7/8; Nynex advanced 2 to 77; Southwestern Bell edged up 1 to 43 3/4, and U.S. West rose 1 to 58 3/4.
Precious metals stocks, by contrast, were weak as gold prices slipped. ASA Ltd. dropped 2 to 61, and Homestake Mining was down 1 1/2 at 42 5/8.
Procter & Gamble rose 1 to 98 3/4. The company said it expects to report record earnings for the quarter ended Sept. 30.
Advancing issues outnumbered declines by about 3 to 2 on the Big Board. The exchange's composite index gained 2.50 to 176.02.
Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 201.59 million shares.
Standard & Poor's index of 400 industrials rose 5.28 to 364.49, and S&P's 500-stock composite index climbed 5.13 at 314.52. The Wilshire index of 5,000 equities closed at 3,093.080, up 36.691.
The NASDAQ composite index added 1.77 to 434.81; the American Stock Exchange index closed at 344.62, up 1.05.
In London, share values rebounded as investors decided that Monday's sharp selloff, when drug maker Glaxo Holdings PLC reported lower than expected profits, had been overdone, brokers said. The Financial Times index of 100 leading shares rose 11.7 to 2,350.2.
Tokyo share prices advanced to a record finish Tuesday on a strong bullish sentiment sparked by higher yen-denominated bond futures prices, brokers said.
The Nikkei 225-share market index rose 115.98 to a record closing 26,400.63, outdistancing an Oct. 9 closing high of 26,338.77.