NEW YORK, AUG. 24 -- The Dow Jones industrial average finished a down week on an up note, rising 49 points today on bargain hunting and a dollar drop in the price of a barrel of oil.

The Dow surged 41 points at the opening amid widespread perceptions that Thursday's high-volume sell-off, accompanied by disastrous advance-decline figures, identified the end of a selling spree from which the Dow could bounce 100 to 150 points.

The early gains were chipped away by successive news reports from the Midle East on the standoff between Iraqi troops and Western diplomats in Kuwait City. The rally was ultimately saved by at least two waves of index-arbitrage program buying in the last 1 1/2 hours of trading -- the first really noticeable buy programs of the day.

The stock rally came despite continued declines on the bond market, which hit its lowest point in 16 weeks as yields on 30-year Treasury bonds reached 9.16 percent. For the week, the 30-year bond lost 2 1/8 points, which translates into $21.25 for every $1,000 invested.

Wall Street's one-day rebound followed similar action in Europe and the Far East, and won support from the oil market, where the price of the main blend of U.S. crude oil fell $1.02 per barrel today, closing at $30.91 on the New York Mercantile Exchange. The dollar also held its ground.

At the close, the Dow stood at 2532.92, up 49.50, but advancing issues outpaced declining ones on the Big Board by only a moderate 3-to-1 ratio. Although NYSE volume was active at 200 million shares, it contracted from heavy 250 million shares during Thursday's sharp decline.

For the week, the Dow posted a 111 point drop, a loss of about 4.2 percent on the week.

Debate continued today over whether Thursday's big decline, after a week of generally falling prices, represented a classic selling climax that should lead to at least a tradable rally in stocks, if not a bull move. Even some bearish analysts conceded that Thursday's selling, while not of panic proportions, came very close to urgent selling.

''The market looks like it's reached a short-term bottom'' (near 2480 on Thursday), said long-term bear James B. Stack, who scrutinizes Fed policy and publishes the InvesTech market letter from Whitefish, Mont. ''The Dow could rally 100-150 points to above 2600 over the next couple of weeks."

Technician Eugene Peroni Jr. at Janney Montgomery Scott agreed that the upside potential of a near-term rally could take the Dow back near 2600. But longer term, Peroni said, ''I don't see an elixir or a speedy recovery. ... The level of bearish sentiment among market advisers is high. However, there is a pronounced air of complacency among investors."

Among Dow components benefiting most from today's rally were some of the biggest losers on Thursday. Boeing surged 3 3/8 to 45 7/8, General Electric bounced 2 7/8 to 61 3/8 and IBM, buoyed by publicity about its new mainframe computers to be unveiled in early September, rallied 3 1/2 to 100 3/8 after closing below the century mark for two days running.

Among volume actives, Philip Morris rose 1 7/8 to 43 1/4 and AT&T gained 1 3/8 to 31 7/8. Crude oil futures generally were down on falling oil prices, although Texaco bucked the trend, adding 3/8 to close at 60 1/2.

Shares in McCormick & Co. rose 1 1/2 to close at 13 3/4 after the Baltimore spice company announced a buyback of 2 million shares.

Software maker Novell rose 2 1/4 to 24 1/4 on analyst predictions of higher profits. The stock had declined following the breakdown in merger talks with Lotus.

The Dow transports rose 8.40 to 869.71, but the utilities, considered an interest-rate bellwether, slumped 0.75 to 190.96 in defiance of all other major market indexes.

Among broad stock indexes, the Standard & Poor's 500 was up 4.45 at 311.51, the NYSE Composite up 2.17 at 171.05, the Value Line up 2.78 at 238.89, the Amex Market Value up 0.44 at 316.29 and the Nasdaq composite -- which was hit especially hard on Thursday -- rebounded 7.11 to close at 367.33.