STOCKS : Market Builds on Early Gain; Dow Adds 27.25

Wall Street converted a slight morning gain Tuesday into a full-blown rally by the close of trading, boosted by several waves of computer-driven trading and a rebound in the bond market and lower interest rates.

The Dow Jones index of 30 industrials rose 27.25 to 2,676.80.

Advancing issues outnumbered declining ones by more than 2 to 1 in nationwide trading of New York Stock Exchange-listed stocks, with 1,028 up, 489 down and 484 unchanged.

Big Board volume totaled 143.64 million shares, up from 140.11 million Monday.

“You had a bond market that waffled a bit and then came on strong,” said Austin George, head of equity trading for mutual fund operator T. Rowe Price Associates in Baltimore.

By late afternoon, the benchmark 30-year government bond was up 25/32 of a point, or $7.80 per $1,000 face amount.

Robert L. Kahan, manager of equity trading at Montgomery Securities Inc. in San Francisco, said trading also was quiet until early afternoon because of a lack of market-affecting news.

The government reported that orders to factories fell 5.4% in January. But the figure was in line with analysts’ estimates and had little market impact, traders said.

The buying driven by computer programs was launched when stock index futures jumped in price relative to the underlying stocks.

“It just kind of touched the level (to activate the programs) a couple of times,” George said.

Among blue chip issues on the NYSE, General Electric was up 5/8 to 62 3/8, American Telephone & Telegraph was up 3/4 to 40 5/8 and Philip Morris was up 1 3/8 to 38 1/4.

Hilton Hotels rose 2 1/2 to 63 3/8 on heavy volume. Dow Jones reported that analyst Joe Doyle of Smith Barney alerted brokers that he expects the Hilton board to meet today and that he believes there is a 70% chance a deal will be struck to sell all or part of the company. A Hilton spokesman declined to comment on the report.

American Express, the most active NYSE issue, was down 1/4 to 27 1/4, on top of losing 1 7/8 Monday. Over the weekend, the company announced plans to reacquire the publicly held shares of its troubled Shearson Lehman Hutton brokerage through an exchange of stock.

Texaco, another blue chip, was up 7/8 to 59 7/8. Standard & Poor’s Corp. upgraded the rating on Texaco senior debt and preferred stock, citing the oil company’s continued improvement in financial performance.

Among other most active issues, Pinacle West jumped 2 1/8 to 13 7/8. The utility and bank holding company rejected a sweetened takeover bid from Pacificorp. Pacificorp fell 3/8 to 21 3/4.

Stock prices on the Tokyo Stock Exchange fell in the final half hour of trading, pushed lower by profit taking and futures-linked selling by foreign brokerages. The key Nikkei average of 225-share index slipped 54.12 to close at 33,791.08.

In London, shares ended lower as the market remained nervous after Monday’s sharp drop in the British pound. The Financial Times 100-share index shed 14.5 to 2,216.0.

CREDIT Bond Prices Get Lift From Strong Dollar Bond prices recovered, buoyed by modest strength in the dollar.

The Treasury’s closely watched 30-year bond jumped about 3/4 point, or $7.50 for every $1,000 in face value. Its yield tumbled to 8.57% from 8.65% late Monday.

Analysts said bond prices were lifted by the dollar, which finished mostly higher in domestic trading after falling overseas. A strong dollar tends to boost prices of dollar-denominated securities such as bonds and notes.

Much of the buying in bonds came from investors who had been caught short by Monday’s sharp tumble, analysts said. A wave of negative news had pushed the key 30-year bond down 1-5/32 points, or $11.56 per $1,000 in face value, in Monday’s trading.

“Basically, a lot of shorts got squeezed,” said Jay Goldinger, a principal of the investment firm Capital Insight Inc. in Beverly Hills.

The federal funds rate, the interest rate banks charge each other on overnight loans, was unavailable.

CURRENCY Down Early, Dollar Rallies in New York The dollar was mixed, closing mostly higher in domestic trading after falling overseas in the absence of major developments to move the foreign exchange markets.

The dollar declined in early going because of trader speculation that an interest rate hike in Japan, which would bolster the yen against the dollar, was imminent. When the increase never materialized, the dollar recovered some ground in Europe, although it still closed down from Monday’s levels.

The dollar then moved higher against most currencies in New York.

Robert Ryan, senior foreign exchange trader with Bank of New York Co., said the market shied away from testing the upper end of the dollar’s trading range, the point at which central banks, including the Federal Reserve, would be expected to step in and try to push the dollar down.

The Bank of Japan intervened in Asian dealings overnight, selling the dollar lower. Dealers said the Fed sold dollars for yen late in the day in the European market, but the impact was minimal.

The dollar closed in New York at 149.85 yen, up from Monday’s 149.025 yen. In Europe, it closed at 149.75 yen after slipping 0.45 yen in earlier Tokyo trading to 149.50 yen.

Ryan said traders generally were awaiting the Labor Department’s employment report for February, scheduled for release on Friday. The market expected the nation’s non-farm payroll to have expanded by 225,000 jobs, indicating that the economy is stronger than many have thought.

Such a report is expected to move the dollar higher because the Fed is less likely to nudge U.S. interest rates down--which would diminish returns on dollar-denominated investments--when the economy shows signs of strength.

The dollar fell against the British pound Tuesday. In New York, sterling was quoted at $1.6475, up from $1.6445 late Monday, and in earlier London dealings, it rose to $1.6495 from $1.6390.

Gold prices were mixed. The metal fell in New York. On the Commodity Exchange, gold for current delivery fell 50 cents an ounce to $403.60, and Republic National Bank later quoted a bid of $403.45, down 85 cents.

COMMODITIES Livestock Futures Make Big Advances Most livestock and meat futures rose strongly on the Chicago Mercantile Exchange, helped by short-term demand and favorable shipping weather.

On other futures markets, soybeans soared and grains were mixed, while oil products, precious metals and coffee dipped.

A higher-than-expected cash market and a belief that Monday’s futures market was oversold pushed pork prices higher, said Phil Stanley, a trader-consultant.

Contract highs were set on live hog futures for delivery in June, July, August, October and December.

An improvement in weather conditions for animal movement in the U.S. Midwest was credited for better cattle prices, said analyst Paul Hare of Linnco Futures Inc.

Cattle settled 0.05 cent lower to 0.27 cent higher, with the contract for delivery in April at 76.70 cents a pound; feeder cattle were 0.37 to 0.55 cent higher, with March at 81.35 cents a pound; hogs were 0.25 to 0.85 cent higher, with April at 50.32 cents a pound, and frozen pork bellies were 0.25 cent to 2 cents higher, with March at 48.27 cents a pound.