Stocks Soar on Hopes for Peace; Dow Gains 40.84 : Wall Street: Blue chips have risen 194.55 points since hitting their low for the year on Oct. 11.

The Dow Jones industrial index jumped 40.84 points to 2,559.65 on Friday as the stock market read hope into President Bush’s remarks that a peaceful settlement of the Persian Gulf crisis may still be possible.

The market, which has traced a wobbly advance since Oct. 11, apparently took particular comfort from Bush’s offer to send Secretary of State James A. Baker III to Baghdad and his invitation to Iraq’s foreign minister to visit Washington, traders said.

The Dow was up more than 50 points in mid-afternoon, tripping off restrictions on computer-directed program trading at the New York Stock Exchange.

“This was the first real progress toward peace,” said Chris Pedersen, director of trading at 21st Securities in Manhattan.

Also feeding the advance was a sharp drop in oil prices. In New York trading, the price of a barrel of the benchmark light sweet crude for January delivery fell $4.06 a barrel to $28.85.

Traders noted that the decline pushed oil prices below the psychologically important $30-a-barrel mark. The bond market also rallied, lifting the price of the 30-year Treasury bond up more than $10 per $1,000 of face value.

Volume on the New York Stock Exchange was a relatively heavy 192.35 million shares, compared to Thursday’s 140.92 million. The Standard & Poor’s 500-stock index climbed 5.80 points, or 1.83%, to 322.22.

The move means that the Dow has risen about 194.55 points, or about 8%, since hitting its low for the year of 2,365.10 on Oct. 11. The Dow had fallen nearly 635 points, or about 21%, from its all-time high of 2,999.75 to its Oct. 11 low.

In early trading Friday, stock prices drifted lower as investors read gloom into the resolution passed Thursday by the United Nations Security Council. The resolution, adopted by a 12-2 vote, authorizes the United States and its allies to expel the Iraqis from Kuwait by force after Jan. 15.

But the markets read Bush’s remarks at a mid-morning press conference as a sign that “he’s willing to talk, and before now he really hasn’t been,” said Howard Berl, a trader at Montgomery Securities in San Francisco.

Some investors also seemed to read hope for lower interest rates in Bush’s remarks that the economy was “at best in a serious slowdown.”

Some technical analysts--who try to predict the market’s movements from a study of its internal dynamics--argued that the Dow had crossed an important resistance point during the day.

Eugene Peroni, director of technical analysis at Janney Montgomery Scott in Philadelphia, said he believes that the bear market is now over and predicted that the Dow will trade between 2,530 and 2,665 over the next few weeks.

Others were less optimistic. Twenty First Securities’ Pedersen said he believes that the market will remain strong in December, as investors try to snap up bargains, but will weaken early next year as the economy remains weak.

“I wouldn’t expect it to come back too much until some of our basic industries start strengthening,” Pedersen said.

Among other indexes, the New York Stock Exchange composite index added 2.92 points, or 1.72%, to 176.06. The NASDAQ composite index of over-the-counter stocks gained 3.31 points, or 0.9%, to 359.06.

Market highlights:

Among actively traded Big Board issues, General Electric jumped 1 5/8 to 54 3/4, Philip Morris was up 5/8 at 48 5/8, Pepsi was up 5/8 at 25 5/8 and General Motors was down 1/2 at 36 1/2. Motorola tumbled 3 3/8 at 50 1/2; analysts had lowered their earnings estimate for the company.

Oil stocks rose, and the airline sector got a strong boost from lower crude prices. AMR was up 3 at 47 1/4, Delta was up 2 3/4 at 56 3/4 and UAL was up 3 5/8 at 97 1/2. Pharmaceutical issues also advanced, with Abbott Labs up 1 3/8 at 43 5/8, Pfizer up 3 at 80 3/4 and Eli Lilly up 3/4 at 73 3/4.

In Tokyo, stocks lost ground but closed well above their lows for the day, with the Nikkei index off 257.97 points at 22,454.63. In London, the Financial Times 100-share index gained 13.8 points to end the session at 2,149.4. In Frankfurt, Germany, the 30-share DAX index climbed 22.31 points to 1,441.23.