Dow Rises 25.24 to Top 2,100 Level as Market Surges in Late Trading

Stock prices advanced sharply late Tuesday and pushed the Dow Jones industrial index back over the 2,100 level after a seesaw session influenced largely by conflicting signals on inflation and interest rates.

Buying intensified near the close and pushed the key index of 30 industrials 25.24 points higher to 2,109.17, more than erasing the 20.09-point loss of the previous session.

Broader stock indicators also rose, but trading was erratic and mixed through most of the day, reflecting considerable confusion about the market’s immediate direction.

“We’re in a tug-of-war,” said Peter J. DaPuzzo, manager of retail equities at Shearson Lehman Hutton Inc. “People have money on the sidelines, coming in on the belief that interest rates seem to be holding steady. But the bears are selling on fear that the drought will cause higher prices and inflation.”

Stocks strengthened early in the session after the Labor Department reported a 0.3% rise in May consumer prices, lower than expected. But the market weakened on fear that the Federal Reserve was tightening credit, along with sharply higher commodity prices caused by the drought.

Wall Street rallied again on news from the Treasury Department that the federal budget deficit narrowed last month to $22.5 billion from $35.6 billion a year earlier, initially suggesting a significant improvement that could reduce the government’s enormous borrowing needs and thereby keep interest rates down.

Although stocks remained higher, closer scrutiny showed the deficit for the first eight months of the fiscal year was greater than the year-earlier period. This suggested that stocks could retreat again today.

Gainers Top Losers

“On the close, a lot of traders started realizing we had a better Treasury budget number because of tax collections,” said Jack Barbanel, a futures strategist at Gruntal & Co. in New York. “So it’s difficult to assess whether the budget deficit really reflects an improvement or is just temporary.”

For most of the day, losses in U.S. bond prices exacerbated interest rate worries and added to the Dow’s lower showing. But by late afternoon the benchmark 30-year Treasury bond was almost unchanged from Monday’s closing price to yield 9.09%, down from the day’s high at 9.12%. Bond yields rise as prices fall.

Advancing issues outnumbered declines by about 9 to 5 in nationwide trading of New York Stock Exchange-listed stocks, with 937 issues up, 543 down and 467 unchanged.

Volume on the NYSE totaled 155.06 million shares, considerably more than the 116.75 million shares traded Tuesday, one of the slowest days this year.

Nationwide, consolidated volume in NYSE-listed issues, including trading at regional exchanges and on the over-the-counter market, totaled 180.70 million shares.

IBM rose 3 1/8 120 after the company announced a new family of computers. The advance helped inspire buying in other technology stocks, notably Compaq, up 3 to 60 1/2; Prime, up 3/8 to 15 7/8, and Hewlett Packard, up 3/4 to 54 1/2. In the over-the-counter market, Apple rose 3/4 to 44 7/8 and Intel rose 1 to 36.

Pillsbury Declines

Among other notable blue chips, Philip Morris rose 1 to 84 1/2, Minnesota Mining gained 1 to 63 1/2, Boeing advanced 1 1/2 to 56 1/8 and Woolworth climbed 2 to 53.

Pillsbury Co. fell 3/4 to 36 after the company spoke to analysts and deflated recent rumors that it might sell its troubled Burger King subsidiary.

Large blocks of 10,000 or more shares traded on the NYSE totaled 3,322, compared to 2,456.

The NYSE composite index of all listed issues rose 1.33 to 153.29.

Standard & Poor’s index of 400 industrials rose 3.11 to 313.87, and S&P;’s 500-stock composite index rose 2.73 to 271.67.

At the American Stock Exchange, the market-value index rose 1.76 to 306.88. The NASDAQ composite index for the over-the-counter market closed at 387.75, up 1.76.

The Wilshire index of 5,000 equities closed at 2,704.051, up 22.871.

Tokyo stocks, meanwhile, closed lower in slow trading. The Nikkei index of 225 selected issues fell 213.46 to close at 27,925.57. The index fell 203.43 the day before.

In London, share prices jumped to finish near the session’s highest levels, but analysts had trouble explaining the rise.

The Financial Times-Stock Exchange 100-share index was up 16.1 at 1,860.1.

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