Higher Dollar Helps Push Dow Up 7.83 : Market Overview

* Stock prices rode out a wave of afternoon selling to post a moderate gain, buoyed by overseas rallies, a higher dollar and firmer bond prices. The Dow Jones average, up more than 25 points at mid-session, closed with a 7.83-point gain at 3,254.64.

* The dollar’s rise against the German mark and most other currencies came after government reports provided mixed news on the economy.

Stocks

Building-related stocks with interests in Florida were some of the day’s standout performers in the aftermath of Hurricane Andrew.

In the broader market, advancing issues outnumbered declines by more than 3 to 2 on the New York Stock Exchange. Big Board volume came to 178.6 million shares, against 171.86 million Wednesday.

Stock prices also climbed in major foreign markets, reversing a recent slide that had unsettled Wall Street.

Tokyo’s 225-share Nikkei index surged 6.13% in a move that traders said helped ease months of pessimism. The Nikkei added 1,013.35 points to 17,555 in heavy trading.

London’s 100-share Financial Times average jumped 26.6 points to 2,311.6, while Frankfurt’s 30-share DAX average rose 40.14 points to 1,513.42.

On the domestic economic front, the Labor Department announced that the number of Americans filing first-time claims for unemployment fell by 92,000 to 382,000 during the week ending Aug. 15.

In another report, the Commerce Department said gross domestic product grew at a seasonally adjusted annual rate of 1.4% in the second quarter.

Because it matched an estimate issued in July, brokers said it exerted no strong pull on the market either way.

Market highlights:

* Home building and construction materials stocks drew buying interest from traders anticipating a major rebuilding effort in Florida and Louisiana after this week’s hurricane, which caused billions of dollars in damages.

Home Depot, operator of building supply and home improvement stores, climbed 1 1/2 to 52 1/4; Lennar, a residential-community developer, gained 1 3/4 to 30 1/8; Elcor, which makes roofing shingles, jumped 1 3/4 to 35 1/4, and Hughes Supply, a distributor of construction materials, spurted 1 1/8 to 14 3/8.

Home Depot said it has been holding the line on lumber prices in south Florida despite heavy customer demand and sharp increases in wholesale prices.

* Fleetwood Enterprises, a producer of manufactured housing, rose 1 1/4 to 30 7/8. The stock jumped 3 1/4 points Wednesday after the company reported higher-than-expected first-quarter earnings.

* Philip Morris, which announced a dividend increase Wednesday, gained 5/8 to 81 1/4 in active trading.

* Other blue chips contributing to the Dow’s rise included Walt Disney, up 1/2 at 34 3/8; Allied-Signal, up 1 1/8 at 53 5/8; International Business Machines, up 1 at 87 3/8, and J. P. Morgan, up 3/8 at 59 3/4.

* Auto issues, by contrast, came under renewed pressure amid worries about recovery prospects. General Motors lost 3/8 to 33 3/4, Ford Motor 1/8 to 40 3/8 and Chrysler 1/8 to 19 1/2.

* A number of NASDAQ technology stocks rose. They included Microsoft, up 2 to 73 5/8; Novell, up 1 1/4 to 50 3/4; Intel, up 3/4 to 57 3/4; Adobe Systems, up 1 1/8 to 33 1/4, and Seagate Technology, up 3/8 to 13 5/8.

Currency

“The dollar had a little bit of a good tone to it this morning when the jobless claims data came out, but it drifted off as the day went on,” said Joe Volpicella, chief currency trader at Westpac Banking Corp. in New York.

In New York, the mark closed at 1.409, up from 1.407 Wednesday. Earlier this week, the dollar hit a new closing low of 1.402 marks.

Low U.S. interest rates and a sluggish economy have discouraged investment in the dollar.

Traders said the dollar was supported by French Economics Minister Michel Sapin’s comment that the Group of Seven industrialized nations did not want the currency to weaken further.

The dollar was at 124.75 Japanese yen in New York, down from 124.85 Wednesday.

Credit

The price of the Treasury’s main 30-year bond was up 9/32 point, or $2.81 per $1,000 in face amount. Its yield, which falls when prices rise, was 7.39%, down from 7.41% Wednesday.

Samuel D. Kahan, chief economist for Fuji Securities Inc. in Chicago, said the rise in bond prices is a reflection of the fact that the economy remains shaky.

“The general thrust of most of the economic news we’ve gotten continues to suggest that the economy is not booming and maybe is vulnerable to another swooning,” he said.

The federal funds rate, the interest on overnight loans between banks, rose to 3.375% from 3.313% Wednesday.

Commodities

Sugar futures settled sharply higher on New York’s Coffee, Sugar and Cocoa Exchange in delayed reaction to reports of Hurricane Andrew’s extensive damage to the Louisiana sugar cane crop.

On other markets, livestock and pork were mixed, grains and soybeans retreated, energy weakened and precious metals were higher.

Sugar for October delivery was 0.27 cent higher at 9.20 cents a pound on news of the Louisiana crop damage.

Gold futures rose in quiet trading on New York’s Commodity Exchange. August gold was 90 cents higher at $339.20 an ounce. September silver was 3.5 cents higher at $3.705 an ounce.

October light, sweet crude oil was 8 cents lower at $21.13 a barrel on the New York Mercantile Exchange.