Market Ignites in Late Rally; Dow Gains 14.87

NEW YORK —  The stock market staged a late comeback Thursday, sending the Dow Jones industrial average up 20 points in the last half an hour of trading. The late rally reversed a daylong loss in an otherwise lackluster session.

The Dow Jones average of 30 industrials, down more than 20 points at its lowest level of the day, finished with a gain of 14.87 at 2,310.68.

Volume on the New York Stock Exchange came to 153.77 million shares, down from 171.42 million in the previous session.

The market sold off briefly at mid-session as rumors circulated that President Reagan might not reappoint Paul A. Volcker as chairman of the Federal Reserve when his term expires this summer.

But prices quickly recovered after the White House and the Fed said no such announcement was forthcoming.

Airline Stocks Gain

Allegis jumped 8 3/8 to 87 1/2. The company announced a recapitalization that included a $60-a-share cash distribution to shareholders.

Among other leading airline issues, AMR gained 2 to 57 5/8 and Delta Air Lines rose 1 3/4 to 55 3/4. That helped the Dow Jones transportation average to reach 980.70, up 17.88 or 1.86%. Chase Manhattan rose 1/2 to 37 3/4. After the close Wednesday, the company said it was adding $1.6 billion to its reserves against problem foreign loans. Other money-center bank stocks were mixed.

In the credit markets, meanwhile, bond prices turned firmer late in the session, boosted by a slight drop in a key commodity index and reports that Japan will act to stimulate its economy.

The Treasury’s key 30-year bond gained about point, or about $2.50 for every $1,000 in face amount. Its yield settled at 8.70%, down from 8.73%.

In the secondary market for Treasury bonds, prices of short-term governments were up 3/32 point, intermediate maturities ranged from 3/16 to 5/32 point higher and the 20-year issue was up 19/32 point.

The federal funds rate, the interest on overnight loans between banks, traded at 6.688%, down from 6.875% Wednesday.