NEW YORK -- U.S. stocks closed higher yesterday after five sessions of declines, propped up by rallies in bonds and the dollar.
The Dow Jones industrial average gained 23.78, to 3,176.03, amid a flurry of computer-guided buy orders, according to Birinyi Associates. The Dow recovered after setting a 1992 low of 3,152.25 Wednesday following disappointing results from the Treasury's seven-year note auction.
Advancers outpaced decliners by a margin of almost 9 to 5 among common stocks on the New York Stock Exchange.
Trading was active, with about 204 million shares changing hands on the Big Board. Standard & Poor's 500 rose 3.50, to 407.75, and the NASDAQ Composite gained 4.69, to 573.89.
"It's the realization that the world didn't come to an end because the Fed didn't cut the discount rate," said Jack Solomon, a technical analyst at Bear, Stearns & Co. "We've come to live without a rate cut."
Still, Treasury bonds rallied as talk lingered that the Federal Reserve would nudge rates lower, traders said. Earlier yesterday, bonds had retreated on a bigger-than-expected drop unemployment claims.
The Labor Department said initial jobless claims dropped 24,000 to 400,000 in the week ended Sept. 26. Economists had expected a decrease of 3,000 claims.
"Bonds stabilized, and that's encouraging," said Mr. Solomon.
The rise in bonds, coupled with a 3-pfennig rally in the U.S. dollar, countered frustration over Germany's unwillingness to lower interest rates and skittishness about U.S. companies' third-quarter earnings, traders said. The dollar gained against the German mark in the absence of moves by the Fed to lower rates.
"Looking for [rate cuts] is one thing," said John Blair, head equity trader at County NatWest. "Hoping is the more appropriate word."
Pessimism about third-quarter earnings will continue to weigh on stocks, said Bear Stearns' Mr. Solomon, citing the two-day plunge in Borland International Inc. "Anybody comes in with bad earnings, we'll shoot 'em on the spot."
Health care, telephone, international oil and general retail stores gained the most among the S & P 500 industry groups.
Borland International, Comverse Technology, Centerior Energy, Novell and Navistar International were the five most actively traded stocks.
Borland tumbled 3 1/8 , to 27 5/8 , as analysts chopped their earnings estimates and longtime bull Goldman, Sachs & Co. removed the stock from its "buy" list. The stock has been hammered by worries about sluggish sales of Quattro Pro for Windows, delays in Windows database software products, and declining demand for older DOS products.