Heartened by falling bond market interest rates, stock investors resumed buying Tuesday, looking for bargains among shares that had been beaten down by four straight days of losses.
Some encouraging second-quarter earnings reports helped support the market, analysts said.
The Dow Jones industrial average gained 31.03 points to 5,581.86. In the four previous sessions, Wall Street's best-known indicator tumbled 179.15 points, or 3%.
Advancing issues outnumbered decliners by about 4 to 3 on the New York Stock Exchange, where volume totaled 379.19 million shares as of 4 p.m., up from 366.10 million Monday.
Broader market indexes weren't as strong as the blue chips. The NYSE's composite index gained 1.24 points to 351.57. The Standard & Poor's 500-stock index rose 2.21 points to 654.75 while the Nasdaq composite index rose 4.76 points to 1,153.59.
At the American Stock Exchange, the market value index was 2.24 points lower at 566.67.
The market's weakness in recent days has been spurred by fears that the economy was speeding ahead too fast and that the Federal Reserve Board was about to boost consumer and business lending rates to slow it down as a way to forestall a resurgence in inflation.
Stock traders took their cues from the Treasury bond market, where interest rates spiked upward Friday after a June employment report showed much stronger job growth than economists predicted.
Increased lending rates generally hurt stocks because of expectations that consumers will spend less and individual and corporate borrowing will cost more, resulting in lower corporate profits.
On Tuesday, the bond market rallied, sending its rates downward, and that helped spur stock buying.
The yield on the Treasury's main 30-year bond fell to 7.12% from 7.18% on Monday.
Freedman noted that the stock market has taken a hit after other recent reports showing faster-than-anticipated job growth--but has usually recovered. Tuesday's gain may be more of the same, he said.
"I think there's some bargain hunting out there," he said, cautioning that the market is likely to remain volatile until June's inflation indexes are released starting on Friday.
Among Tuesday's highlights:
* A strong earnings report from Nike sent shares up 4 1/2 to 108 3/4. Likewise, International Paper shares rose 1 5/8 to 39 1/8.
* Hewlett-Packard was down 4 to 87 1/8 after the company announced a cut in prices of some of its notebook computers and some analysts lowered earnings estimate.
* Semiconductor shares fell after earnings estimates were cut for three chip makers and two equipment companies. LSI Logic slid 1 7/8 to 21 5/8, Texas Instruments dropped 3/8 to 49 3/8 and VLSI Technology slipped 1/4 to 12 5/8.
* Shares of some health maintenance organizations fell after Mid-Atlantic Medical Services said it would lose between 5 cents and 10 cents in the second quarter due to higher claims. Mid-Atlantic fell 1/2 to 13 3/4. Much bigger United Healthcare lost 2 1/2 to 45 5/8.
Most foreign markets closed higher. Mexico City's Bolsa broke a four-session losing streak to rise 50.83 points; London's FTSE-100 was up 10.8 points; Frankfurt's DAX rose 11.4 points.
Market Roundup, D5