Buyers Return With Caution; Dow Rises 5.41 : Market Overview

* Buyers returned on Wall Street after two days of steep losses, though the enthusiasm was tentative. The Dow Jones industrial average rose 5.41 points to 3,308.41 after losing a total of 58.63 points the previous two sessions.

* The dollar turned lower after Monday’s big rally, as the Federal Reserve gave no indication that it planned further support moves.

* Tokyo stocks recovered somewhat from Monday’s big drop, as the Nikkei average climbed 117.93 points to 16,002.41. But by mid-morning today the Nikkei had suffered another setback, falling 445.30 points or 2.8% to 15,557.11--a new 1992 low.

Stocks

Investors’ gloom lifted somewhat as foreign markets stabilized Tuesday. Sentiment also was helped by some strong second-quarter earnings reports.

On the New York Stock Exchange, gainers beat losers 877 to 847. Volume rose to 173.76 million shares from 165.76 million Monday.

Smaller stocks posted a bigger turnaround, as the NASDAQ composite index jumped 4.35 points to 568.63, an 0.8% rise.

The Dow was ahead almost 20 points before computer-driven selling drove it lower.

Analysts noted that the market now is enjoying a spate of good second-quarter earnings reports, which are erasing some of the disappointment from the dismal reports earlier in the month. Investors are looking for earnings to justify the stock market’s still-high levels, experts say.

Meanwhile, in testimony before Congress, Fed Chairman Alan Greenspan sounded an optimistic note while conceding that the economy has failed to perform up to expectations. Analysts said the market wasn’t surprised by Greenspan’s comments.

Among the market highlights:

* Strong earnings reports sparked rallies in a broad cross-section of stocks, including United Technologies, up 2 1/4 to 53 1/2; Pepsico, up 1 1/8 to 36 3/4; Warner-Lambert, up 1 to 65 1/8; Weyerhaeuser, up 1/2 to 33 5/8; Marshall Industries, up 1 1/8 to 33, and Callaway Golf, up 2 to 27.

* BankAmerica continued to advance after its healthy earnings report on Monday. The stock gained 1 1/8 to 45 1/2. But rival Wells Fargo tumbled 2 1/2 to 70 3/4 after reporting disappointing results.

Among other major banks, Chemical Banking reported higher earnings but its stock eased 7/8 to 36. Citicorp, which reported a second-quarter profit vs. a loss last year, added 1/4 to 20 1/4.

* Retailers were broadly higher. Penney gained 2 1/8 to 72 5/8, May Department Stores rose 1 7/8 to 56 1/2 and Price Co. added 1 1/8 to 32 7/8.

* Among earnings disappointments, Canada’s Northern Telecom fell 3 5/8 to 34 3/8 after reporting sharply lower quarterly results. Another earnings casualty was Diagnostic Products, which fell 2 to 29 3/8 on its lower report.

* Drug giant Syntex slumped 1 7/8 to 32 5/8. Analysts said sales of the drug company’s Toradol painkiller were slow in June, and at least one analyst downgraded the stock.

Overseas, London’s Financial Times 100-share average rose 11.9 points to 2,415. Frankfurt’s DAX average rose 10.10 points to 1,659.77 after plunging 52.99 points on Monday.

Currency

The dollar slipped after Monday’s surge, as Fed Chairman Greenspan failed to reassure the market that the Fed would support the dollar further.

The dollar fell in New York to 1.487 German marks from 1.494 Monday. It also closed at 125.25 Japanese yen, down from 125.45.

The dollar had rocketed on Monday after the Fed and other world central banks aggressively bought dollars, attempting to stop the currency’s latest slide. But on Tuesday central bank activity was virtually nil, traders said.

“The central banks may well have to come in again to prop up the dollar because . . . all the fundamentals still point to a weaker dollar,” said Karl-Heinz Elsen, trader at Chemical Bank.

Credit

Treasury bond yields ended little changed, as traders drew no new insight from Greenspan’s testimony before Congress.

The price of the Treasury’s 30-year bond closed unchanged and its yield remained at 7.66%.

The fed funds rate, the rate on overnight loans between banks, fell to 2.75% from 3.25% Monday.

Commodities

Platinum futures plunged to their lowest levels in weeks on the New York Merc on reports that the Japanese have developed an auto pollution-control device that does not rely on the metal.

Platinum for October settled $13.80 lower at $376.50 an ounce. The slump dragged August gold down $1.50 to $358.10 an ounce on New York’s Comex. July silver slid 2.6 cents to $3.94.

Elsewhere, August light, sweet crude oil eased 1 cent to $21.78 a barrel on the New York Merc.