FINANCIAL MARKETS : Dow Rallies 24 in Thin Action; Oil Prices Drop

Stocks ended higher in light holiday trading Monday as investors seemed to shift their attention from inflation and interest rates worries to third-quarter corporate earnings reports.

The Dow Jones industrial average rose 23.89 points to 3,821.32, the biggest one-day rally since Sept. 15. In the broad market, winners topped losers by 2 to 1 on the New York Stock Exchange.

But analysts noted that trading was light as the Columbus Day holiday kept many investors away. Big Board volume was a mere 213 million shares.

In energy futures trading, meanwhile, oil prices fell after Iraq appeared to have defused tensions in the Middle East by telling the United Nations it was withdrawing troops from its southern border with Kuwait.

On the New York Mercantile Exchange, November crude oil futures eased 27 cents to $17.99 a barrel after retreating from a high of $18.63 reached early in the day.

Oil was boosted in the morning as the weekend buildup of Iraqi forces prompted Kuwait’s western allies to send tens of thousands of soldiers to help protect the oil-rich Persian Gulf emirate.

But as trading wore on, “the market was fairly sure that Iraq was just saber rattling,” one London oil trader said.

In the stock market, buyers took the opportunity to get the upper hand with the “cash” bond market mostly shut down for the holiday. In bond futures trading, yields were slightly lower. The 30-year Treasury bond yield had closed at 7.90% on Friday.

Stocks sensitive to the economy--such as auto, paper and technology issues--were in demand Monday. Many of those stocks had been beaten down in recent weeks as investors worried that the Federal Reserve Board would soon raise short-term interest rates again to cool the economy.

On Friday, however, the government’s report on September job creation showed solid gains in employment but little wage inflation, suggesting that the Fed might not be inclined to move again.

Optimism about rates allowed investors to focus on the prospect of good quarterly earnings reports, traders said.

The stock market is expecting solid third-quarter results, said Alfred Goldman, director of technical market analysis with A.G. Edwards in St. Louis. Corporate reporting begins in earnest this week.

Among Monday’s highlights:

* Though volume was thin, the rally was broad, traders noted. The Standard & Poor’s 500 index, for example, rose 3.94 points to 459.04 and the Nasdaq composite index surged 6.85 points to 756.81. Winners topped losers by 15 to 11 on Nasdaq.

* Technology stocks were hot, led by depressed semiconductor issues. Texas Instruments jumped 2 3/4 to 68 3/8, Micron Technology gained 1 7/8 to 35 1/8 and Motorola leaped 2 to 52 3/4. After the market closed, Motorola reported better-than-expected quarterly earnings of 65 cents a share, up from 48 cents a year ago.

Intel, which unveiled a Pentium chip for notebook computers, gained 1 to 60 7/16.

* Elsewhere in the tech sector, Autodesk surged 2 7/8 to 66 7/8, Digital Equipment jumped 1 3/4 to 27 7/8, Hewlett-Packard soared 3 to 91 1/4, Dell gained 1 1/4 to 39 3/4 and Apple jumped 1 7/8 to 38 7/8.

* Many telecom issues were also strong. DSC Communications surged 1 5/8 to 30 5/8, Nextel Communications leaped 1 5/8 to 20 3/4 and Tellabs jumped 2 1/2 to 47 3/4.

* Scott Paper rocketed 3 1/4 to 64 3/4 on news that it is selling its S.D. Warren Co. unit to an investment group headed by a South African pulp and paper producer.

Other paper producers rallying included International Paper, up 2 1/4 to 77 7/8, and Georgia-Pacific, up 2 1/8 to 75 1/2.

* Auto stocks, recently trading near 1994 lows, rebounded in anticipation of strong third-quarter earnings. General Motors rose 1 5/8 to 45 1/2, Chrysler gained 1 1/4 to 45 7/8 and Ford was up 1 to 28 1/4.

* Other transportation issues gained as well. The Dow transports index jumped 17.70 points to 1,462.48. Winners included United Airlines parent UAL, up 2 to 85 7/8; Conrail, up 7/8 to 49 1/8, and American President, up 1 1/8 to 26 7/8.

Overseas, Frankfurt’s DAX-30 index zoomed 64.20 points, or 3.3%, to close at 2,024.79 on optimism about the ruling party’s prospects in this week’s elections.

In London, the FTSE 100 index rebounded 33.6 points to 3,032.2.

The Tokyo market was closed for Japan’s Sports Day holiday.

On the downside, Mexico City’s Bolsa index slumped 28.16 points to 2,621.63, hurt by a plunge in shares of Grupo Televisa. In U.S. trading, Televisa dropped 7 1/4 to 47 3/8 after brokerage Goldman Sachs cut earnings estimates for the company, citing slowing sales of advertising time.

At the same time, gold fell 20 cents to $390.70 an ounce on the New York Comex.

Market Roundup, D8

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