Stocks Recover After Early Dip; Dow Adds 3.56

A late blue chip buying surge helped Wall Street recover from an early slide and finish mixed Monday, but a fall in the dollar and worries about technology stocks kept sentiment subdued.

The Dow Jones industrial index of 30 industrials, down about 20 points at its mid-session low, closed with a 3.56 gain at 2,065.97.

However, declining issues outnumbered advances by about 5 to 3 in nationwide trading of New York Stock Exchange-listed stocks, with Big Board volume totaling 120.43 million shares, against Friday’s 119.32 million.

Remarks by President-elect George Bush that he would keep his campaign promise of no new taxes and find other ways to cut the U.S. budget deficit pushed the dollar lower on currency markets, which spilled over into stocks. The dollar fell about one pfennig to 1.7280 West German marks.

Investors are shunning the stock market for fear interest rates may have to be raised to support the sagging dollar. “We are handcuffed to interest rates,” said technical analyst John Solomon at Bear Stearns. “If you want to see this market go up, you have to see interest rates coming down.”

Interest rate concerns have also been hurting the bond market. U.S. bond prices were down early but managed a modest comeback mostly because they have fallen sharply in the past two weeks and were due for a rebound.

“It’s the classic doom and gloom, which means we’re probably close to a market bottom,” said one stock trader. “There’s no reason to buy but not much reason to sell. Coming into a holiday season makes things very slow.”

Technology issues were hit by selling after Intel Corp., an over-the-counter stock, reported inventory buildups, suggesting that the industry is headed for a cyclical downturn.

“The technology stocks took it pretty badly on the chin,” said trader Donald Crooks at Morgan Stanley. Intel’s announcement Friday that it will suffer a 10% drop in revenue in the fourth quarter was interpreted as bad news for the entire industry.

Also dampening activity was the expectation of an uneventful week broken up by the Thanksgiving holiday. The market will be open Friday, but the session after Thanksgiving is almost always one of the slowest of the year.

RJR Nabisco climbed 1 7/8 to 85 7/8 and led the most active list among NYSE issues on turnover of more than 3.7 million shares. Directors extended until Nov. 29 the bidding competition to acquire the company.

Ohio Mattress jumped 2 1/2 to 15 3/8. The company said Friday that it was considering its possible sale, among other alternatives.

In the blue chip sector, American Telephone & Telegraph rose 3/8 to 28, Sears gained 3/8 to 39 7/8, International Business Machines slipped 1/8 to 115 5/8 and General Electric was down 1/8 at 43 3/4.

Intel tumbled 3 3/8 to 19 3/4 in the over-the-counter market. Late Friday, the company said its fourth-quarter revenue and earnings would fall short of third-quarter levels because of soft orders for its 80386 microprocessor chip.

The Wilshire index of 5,000 equities closed at 2,625.429, down 2.805 from Friday.

The NYSE’s composite index of all its listed common stocks dipped 0.08 to 150.10.

Standard & Poor’s industrial index fell 0.22 to 306.14; its 500-stock composite index was down 0.25 at 266.22.

The NASDAQ composite index dropped 2.51 to 365.07; the American Stock Exchange closed at 287.17, up 0.50.

Stock prices slid on the London Stock Exchange as market makers slashed prices in a fruitless bid to attract buyers. The Financial Times 100-share index finished down 12.3 at 1,811.1.