NEW YORK, OCT. 18 -- The Dow Jones industrial average soared 64 points in heavy trading today in response to falling oil prices and better-than-expected quarterly profits from a number of the country's biggest corporations.
In contrast to some rallies over the past few weeks, broad secondary market indexes kept pace with the blue-chip averages.
"The key to today was that much of it was real, 'legitimate' bargain hunting by investors," said head institutional trader Sid Dorrs at Charles Schwab in San Francisco.
Foreign buying also picked up somewhat in the morning.
Chief U.S. equities trader Thomas Callahan at Yamaichi International said that today was "the first time in the last six to eight weeks that we saw a demonstrable tilt to net buying from the Far East."
A fair-sized advance in Japanese stocks overnight -- Tokyo's Nikkei-225 rose roughly 2 percent -- and a $2 drop in the price of crude oil during morning trading set stocks off on their upward course.
By early afternoon, the Dow had advanced 54 points, buoyed by buying by computerized program traders and a string of comforting third-quarter profit announcements from the likes of AT&T, Caterpillar, Colgate-Palmolive, Dow Chemical, Digital Equipment and Bank of America.
That momentum allowed the market to continue climbing even as oil prices rose back to about where they started the day at $36.80 per barrel.
When it settled, the Dow average stood at 2452.73, up 64.85 at its highest close in seven sessions. Advancing issues far outpaced declining ones on the Big Board by a ratio of nearly 3 to 1 on heavy volume of 204 million shares.
Corporate earnings were no small part of the picture today, analysts said. While the reports ranged from slightly higher to sharply lower, many were better than Wall Street had expected.
Such a cheery reception for middling earnings, said observers, was an indication of an optimism in the market psychology and growing belief that perhaps the bottom has been hit.
Colgate-Palmolive's stock, for example, jumped 3 5/8 to 65 after announcing earnings of $1.20 per share compared with $1.06 a year ago. The results were only 3 cents higher than the average of analysts expectations.
Digital Equipment surged 4 1/4 to 51 following its report of a profit for its first fiscal quarter of only 21 cents per share, sharply down from $1.20 a year ago.
Dow Chemical traded up 2 1/4 to 41 5/8 after reporting third-quarter profit of less than half that of a year ago.
And farm-machinery giant Caterpillar tackled on 1 7/8 to close at 40 3/8 despite third-quarter earnings half those of last year but above many analyst projections.
Among telecommunications companies, AT&T advanced 1 1/8 to 32 following its report of profit at 65 cents per share, unchanged from the third quarter of 1989. US West advanced 1 1/2 to 37 1/2 on mildly improved earnings. Bell Atlantic rose 1 1/4 to 50 1/2 on similar news.
Among financial stocks, BankAmerica rose 7/8 to 18 3/8 after announcing third-quarter earnings up a healthy 9 percent.
Among other Dow stocks, IBM, a strong leader all day, finished up 4 5/8 at 105 3/8, while Procter & Gamble surged 3 1/4 to 78 1/8 and Boeing advanced 2 1/4 to 48 1/4. At least full-point gains were realized by Alcoa, General Electric, International Paper, Coca-Cola, Minnesota Mining, Philip Morris, Merck, United Technologies and Woolworth.
The Dow transportation average rallied 34.94 to close at 856.88, led by AMR, up 2 3/8 to 48 1/8 and Delta Airlines, up 3 to 60 3/8.
The Dow utilities, which have generally outperformed other indexes in recent weeks, lagged with a 0.82 gain at 208.31.
Among broad stock indexes, secondary measures generally kept pace, for a change, with blue-chip averages.
The Standard & Poor's 500 was up 6.98 at 305.74, the NYSE Composite up 3.54 at 167.13, the Value Line up 3.64 at 219.63, the Amex Market Value up 2.71 at 291.84 and the Nasdaq Composite up 7.25 at 334.03.