Wall St. Bounces Back as Dow Index Gains 29 : Stocks: Reduced threat of a ceiling on credit card interest rate aids recovery from Friday’s 120-point fall.

The stock market bounced back Monday from last Friday’s dramatic plunge, with the Dow Jones industrial average rising 29.52 points, making up nearly a quarter of the 120 points lost in the previous session.

The Dow index of 30 industrial stocks closed Monday at 2972.72, a rise of 1%.

The market’s partial recovery from the fifth largest point loss ever was aided by hasty back-pedaling by the Bush Administration and lawmakers on a plan to put a ceiling on credit card interest rates. Bankers’ complaints that the plan would severely hurt the already troubled banking industry helped touch off Friday’s stock plunge.

Also, traders noted that investors appear to be more tolerant of huge single-day drops in the Dow index, evidently made more confident by the recoveries that followed the October, 1987, stock market crash--a 508-point drop--and a 190.58-point drop in October, 1989.

Scott Marsh, head of equity trading at Dean Witter Reynolds, said that on Monday there was neither strong buying nor selling pressure by individual investors or by most institutions, even though fourth-quarter corporate earnings are expected to be meager and there is now a general conviction that a strong recovery is at least months away.

“The attitude we’ve seen across the board is patience, waiting to see opportunities,” Marsh said.

But there is still great investor concern about the stock market’s performance in the weeks and months ahead, mainly because the economy remains so weak and the effects of recession appear to be more virulent than earlier thought.

But, while U.S. stocks rallied, markets fell Monday in London and other European cities. Stock prices fell in Tokyo Monday. The Nikkei stock index rallied in early trading Tuesday, but closed slightly down by 73.26 points, or 0.31%. The dollar also fell Monday but was bolstered by the upturn on Wall Street.

Stocks started out Monday with an upward surge in orderly trading. Soon after the opening bell at the New York Stock Exchange, Chairman William H. Donaldson was seen grinning on the exchange floor, obviously relieved that the feared Black Monday had not materialized.

Just as a precaution, though, some exchange workers passed around Monday’s edition of the New York Daily News before the opening. Juxtaposed over a picture of the exchange was the headline: “Don’t Panic.”

Traders said they were particularly heartened by a relatively strong performance in the over-the-counter market Monday, including an unexpected rebound in biotechnology stocks. A selloff of those stocks late last week contributed to fears Friday that stocks in general were overpriced.

Overall, results were mixed Monday. On the New York Stock Exchange, more stocks fell than rose, with 727 up, 952 down and 485 unchanged. But Michael Metz of Oppenheimer & Co. said the number of gainers had increased steadily throughout the day, with investors initially showing strong interest only in stocks of the biggest industrial and service companies.

Volume on the Big Board was 241.9 million shares, up from 239.3 million shares on Friday. The NASDAQ composite index of over-the-counter stocks closed up 3.44 at 534.73, after it had fallen as much as 6 points at the beginning of the trading day.

Market analysts said most investors were aware that the Dow index’s fall in the last hour of trading Friday was accelerated by purely technical factors, the most important being computerized program trading linked to Friday’s expiration of options on stocks and stock indexes.

But, if there was no panic, there may also be no return to the bull market that in recent weeks had repeatedly pushed over-the-counter stocks to record levels and kept blue chips high. Metz said worries about a continuing severe recession that coalesced last week are likely to remain.

“There was not the propensity to panic that there had been in previous markets, but I think confidence in the economy and the markets has been shaken,” Metz said.

Growing fear that Congress would impose a ceiling on credit card interest rates has been a contributing factor in the market’s recent behavior. Bush last week exhorted banks to lower interest rates to help stimulate the economy; the Senate followed with an overwhelming vote to cap credit card rates at 14%.

But many economists and financial experts questioned whether lowering credit card rates would provide a significant boost to the economy. The Senate’s action helped provoke Friday’s plunge, but the markets were heartened Monday when the House rejected any immediate action on the issue.

On the Tokyo Stock Exchange, the Nikkei average of 225 stocks dropped 699.06 points, or 2.9%, to close at 23,400.12 on Monday. But Tuesday morning, Tokyo stock prices began moving in step with the rally in New York before closing slightly down.

In London, the Financial Times-Stock Exchange 100-share index fell 43.7 points, or 1.7%, to close at 2,509.9 Monday. The London index had opened 63 points lower.

The dollar dropped against major foreign currencies, but traders said the slide was moderated by the rebound in the stock market. The dollar closed in New York at 129.48 Japanese yen, up from 129.40 Friday. It ended at 1.611 German marks--against Friday’s 1.619.

Bond yields edged higher. The yield on the Treasury’s 30-year bond rose to 7.84% from 7.80% Friday.

Mutual fund investors showed no signs Monday of pulling out of the stock market. Tracy Gordon, spokeswoman for the large Fidelity group of mutual funds, said that the number of shareholders selling during the day leveled off, and the firm finished the day with more buyers than sellers of shares in stock and bond funds.

She said the firm’s biotechnology fund attracted “quite a few buyers,” who were evidently convinced that the companies’ stocks had fallen to bargain levels.