Takeover News Fuels Stock Rally

The stock market rebounded Tuesday in a comeback that carried the Dow Jones industrial average back above 4,000 to close less than a point from its all-time high.

Takeover news affecting technology and other stocks inspired buying as did a recovery in the bond market.

In staging its comeback, Wall Street managed to overcome uneasiness about the implications of the sudden collapse of a venerable old British merchant bank and uncertainty about the direction U.S. interest rates will take in the near future.

The Dow Jones industrial average, which didn’t stray far from its starting point for most of the session, advanced decisively in the final 90 minutes of trading to finish at 4,011.05, up 22.48. The gain almost erased Monday’s drop of 23.17 and hoisted the blue-chip indicator within one point of the record close of 4,011.76 reached Feb. 24.

Advancing Big Board stocks beat decliners by about 7 to 3. Volume on the NYSE floor came to 317.13 million shares as of 4 p.m. Eastern time, compared to 285.80 million Monday.

Some of the stocks that moved substantially or traded heavily Tuesday:

NYSE

CBS, up 2 1/2 to 64 1/2.

The stock rose in response to news that Turner Broadcasting has expressed renewed interest in acquiring the network.

Marion Merrell Dow, up 1 to 24 7/8.

The stock rose after the company disclosed that it might be acquired by Germany’s Hoechst for more than $7.1 billion, or $25.75 a share. Dow Chemical, which owns 71 percent of Marion Merrell Dow, rose 2 3/8 to 67.

NASDAQ

AST Research, up 1 13-16 to 16.

Samsung Electronics has agreed to buy a 40 1/4 percent stake in AST for about $378 million. The news sparked renewed interest in the technology sector. NYSE-listed Motorola rose 2 to 57 1/2.

National Gypsum, up 4 3/4 to 49 1/4 in heavy Nasdaq volume of more than 1.9 million shares.

The company received a takeover offer of $48.50 a share, or $1.1 billion, from BPB Industries. National Gypsum recently has been courted by another company, Delcor.

AMEX

Viacom class B, up 3/8 to 44 3/4.

Viacom, which is under pressure to gets its stock price up over the next several months, conducted private briefings in California for an invited group of major shareholders. Several types of Viacom securities were traded actively.