Stock Market Bounces Back; Dow Gains 8.88

The stock market bounced back from the drop of the past two sessions with a mild rally in quiet trading Wednesday. The Dow Jones average of 30 industrials, down 48.71 points in the week’s first two trading days, recovered 8.88 to 1,846.07.

Volume on the New York Stock Exchange came to 127.35 million shares, against 125.02 million on Tuesday.

After Monday’s record drop of 45.75 points in the Dow Jones industrial average, the market showed signs of steadying in Tuesday’s session. Analysts said the selloff on Monday had not been entirely unexpected and produced little evidence of panic among investors.

Bank Stocks Advance

Money-center bank stocks rose on reports that a new plan was in the works to help Mexico with its international debt problems. J. P. Morgan climbed 2 to 84, Manufacturers Hanover 2 1/8 to 50 3/4, Chase Manhattan 1 5/8 to 41 3/4 and Citicorp 1 1/8 to 58 3/4.

Fruehauf jumped 6 5/8 to 44 5/8. A partnership of investors led by Asher B. Edelman said it planned a $44-a-share tender offer for all of the company’s stock.

Humana fell 1 1/2 to 26. The company said it would have lower earnings for the fiscal quarter ended May 31 and expected another profit decline in the current quarter based on present trends.

Soo Line, which omitted its dividend on grounds of depressed earnings, tumbled 3 1/8 to 27 3/8.

Among actively traded blue-chip industrials, IBM added 3/4 to 149 1/8, Eastman Kodak 3/4 to 60 1/8 and Chrysler was unchanged at 35 1/8.

In the daily tally on the Big Board, about five issues rose in price for every three that lost ground. The exchange’s composite index picked up 0.88 to 138.58.

In the secondary market for Treasury bonds, prices of short-term and medium-term governments were unchanged and long-term issues rose 5/16 of a point, according to the investment firm of Salomon Bros. The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.

In corporate trading, industrials and utilities rose about 1/2 point in quiet dealings. Among tax-exempt municipal bonds, general obligations fell 3/8 point and revenue bonds were up 1/8 point. Trading was light to moderate.

Yields on three-month Treasury bills were rose five basis points to 6.32%. Six-month bills rose five basis points to 6.44%. One-year bills were up five basis points at 6.50%.

The federal funds rate, the interest on overnight loans between banks, traded at 6.8125%, compared to 6.75% late Wednesday.