Late Surge Pushes Dow Index Up 24.05 : Market Overview

* A late surge of buying interest in transport, technology and retail stocks helped break the market’s summer lull, sending the Dow Jones industrial average up 24.05 points to 3,290.31--its best daily showing in more than a month.

* The dollar recovered slightly against most major currencies in quiet trading as investors took profits ahead of the government’s August unemployment report.

* Wheat futures rocketed after President Bush announced $1 billion in subsidies to boost export sales of the grain.

Stocks

The Dow industrials, up 8.91 points on Tuesday, traded in a 10-point range through early afternoon Wednesday, then began to tick up steadily.

By the close, rising issues beat losers by about 5 to 3 on the New York Stock Exchange, where volume was 187.48 million shares versus 174.43 million Tuesday.

Investment strategist David Bostian of Herzog Heine & Geduld said some buyers may have been encouraged because “the market is not buckling,” despite continuing weak economic reports.

In addition, a steadier dollar probably helped attitudes, he said. The dollar had hit all-time lows against the German mark Tuesday.

While there have been few economic numbers to suggest a strong rebound in the economy is possible anytime soon, traders said the stock market’s action suggests that investors may nonetheless be anticipating renewed growth.

“There’s the feeling the economy may be bottoming,” said Paul Hennessey, trader at Boston Co.

A steep rise in transportation stocks Tuesday and Wednesday helped fuel that sentiment. Transport companies such as airlines and truckers are often the first to benefit in a turning economy.

The Dow transports index shot up 18.97 points Tuesday and 29.70 points Wednesday, when it closed at 1,269.93. The two-day gain: 4%.

Still, many traders warned that Friday’s report on August unemployment could be key in shaping investors’ near-term outlook on stocks. In the meantime, chart-watchers noted that the market has history on its side: Stocks tend to rise in the few days before the Labor Day weekend.

Among the market highlights:

* Among transport stocks, airlines surged. AMR, parent of American Airlines, jumped 2 1/4 to 59 5/8, British Airways rose 2 1/4 to 47 1/2, Federal Express leaped 1 7/8 to 41 3/8, and UAL, parent of United Airlines, gained 1 3/4 to 109 1/4.

Railroads and truckers also zoomed, including Burlington Northern, up 1 7/8 to 37 1/4; CSX, up 1 3/8 to 59 3/4; Roadway, up 1 1/4 to 62 1/4, and Union Pacific, up 1 1/2 to 51 7/8.

* Retailers, which will report monthly sales figures today, were strong as some investors bet on better consumer spending ahead. Gap gained 1 1/2 to 35 5/8, Woolworth rose 1 1/8 to 32, Penney added 3/4 to 69 7/8, and Toys R Us rose 1 to 38 3/4.

* Technology stocks continued their recent rally. Intel soared 1 5/8 to 60 3/4, Apple jumped 2 to 48 1/2, Compaq gained 1 3/8 to 33 7/8, Conner Peripherals zoomed 1 1/8 to 21 1/4, and Motorola rocketed 2 3/8 to 88 7/8.

* Among industrial issues, Alcoa leaped 2 3/4 to 67 7/8. An analyst at Kidder Peabody reiterated a buy on the stock.

* Some recently battered growth stocks returned to favor. Marvel Entertainment rose 1 5/8 to 35 7/8, Tokos Medical advanced 1 5/8 to 24 3/4, coffee retailer Starbucks jumped 2 3/8 to 27 5/8, and Duracell gained 1 to 30 5/8.

* CBS rose 2 7/8 to 200. Smith Barney upgraded its opinion to buy from hold on the company.

Overseas, Frankfurt’s DAX average closed 12.03 points lower to 1,506.67 after dipping below 1,500 in early trading.

But London closed higher, with the Financial Times 100-share average adding 14.6 points to 2,313.0.

In Tokyo, the Nikkei average continued to pull back from last week’s euphoria, losing 152.34 points to 17,587.72.

Currency

The dollar fell again to all-time lows against the German mark early in the day, at one point reaching 1.386, down from Tuesday’s record-low close of 1.390.

But the U.S. currency soon recovered to close in New York at 1.394 marks.

Against the Japanese yen the dollar closed at 123.10, up from 122.70 Tuesday.

The dollar traded in narrow ranges, and the slight rise by the close shouldn’t be viewed as an indication the U.S. currency has ended its period of decline, said Mike Faust, strategist with MMS International in New York. “The underlying position of the dollar is still one of weakness,” he said.

Some traders were selling the mark and buying the greenback in a move to take profits ahead of Friday’s August unemployment figures, said Kevin Lawrie, the Bank of Boston’s director of foreign exchange trading.

There is uncertainty among economists about what the August numbers will show, Lawrie said. If the report brings more bad news for the economy, the Federal Reserve could be forced to ease interest rates again--which probably would send the dollar into another tailspin.

Credit

Bond yields were flat ahead of Friday’s unemployment report.

The price of the Treasury’s main 30-year bond was up 3/32 point, or 94 cents per $1,000. Its yield was 7.37%, down from 7.38% Tuesday.

“The market had a good tone with strong bids all day long, but the overall appetite for buying was moderate, not overwhelming,” said Douglas McAllister, analyst at Prudential Securities.

The Commerce Department’s report that orders to U.S. factories in July recorded their worst decline in seven months, falling 1.1%, was good incentive for bond traders, McAllister said, because it boosts the chances the Federal Reserve will cut interest rates again.

Commodities

Wheat futures prices leaped on the Chicago Board of Trade after President Bush announced $1 billion in subsidies to boost export sales of the grain.

Most other grain futures also rose, lifted by a spillover of buying sentiment from the wheat pit and by forecasts for cooler weather in Midwestern corn and soybean areas in the next two weeks.

Wheat for September jumped 8.75 cents in Chicago to settle at $3.34 a bushel, the highest daily settlement since July 28. September corn rose 2.75 cents to $2.24 a bushel; September soybeans rose 2.50 cents to $5.55 a bushel.

Elsewhere, precious metals extended their losses on New York’s Comex, with October gold falling $2.30 to $339.40 an ounce, and September silver off 2.2 cents to $3.69.

Crude oil futures rose slightly on the New York Merc, with light, sweet crude oil for October delivery up 5 cents to $21.69 a barrel.

But natural gas futures prices fell amid further signs that damage to Gulf of Mexico production from Hurricane Andrew was not as severe as initially believed.

Gas contracts for delivery in October settled at $2.051 per 1,000 cubic feet, down 3 cents on the New York Merc.