Stable Dollar Braces Stocks; Dow Up 1.62

The stock market drifted higher in thin trading Monday. Some wary investors were encouraged by lower interest rates, a steady dollar and good corporate earnings reports.

The Dow Jones industrial average rose 1.62 points to 3,755.43.

In the broader market, advancing issues outnumbered declining ones about 10 to 9 on the New York Stock Exchange. Big Board volume came to a light 227.46 million shares, down from the 275.86 million shares traded Friday.

There was little news to guide investors, so they looked to the bond market, said James Melcher, founder and president of Balestra Capital.

“It was a very slow day with little happening,� he said.

The lower bond rates boosted credit market prices. The Treasury’s bellwether 30-year bond yield dipped to 7.50% from 7.54% on Friday.

That was good for stocks, because lower rates cut the cost of borrowing money and make share prices more appealing relative to interest-bearing investments.

The dollar rose in New York to 98.35 Japanese yen, up from 97.85 yen on Friday. Against the German currency, the dollar closed at 1.547 marks, down from 1.554.

The U.S. currency’s performance was also encouraging, analysts said. The greenback has ridden a rocky road downward against some other major currencies in recent weeks.

The dollar’s decline raised fears of inflation and thus higher interest rates down the road as the cost of imports rises. Its stable performance Monday meant investors didn’t have to focus on the direction of interest rates.

Profit news, meanwhile, drove the stocks of some companies. Midlantic rose 7/8 to 30 3/8 and Upjohn rose 1/2 to 30 5/8 on the NYSE. Both released reports of strong quarterly earnings.

Don Hays, investment strategist at Wheat First-Butcher & Singer, said that since Wednesday, when second-quarter corporate earnings reports began in earnest, 612 companies have weighed in. Of those, 72% showed results better than those of last year’s second quarter.

Mostly, however, investors were cautious Monday, said Alfred Goldman, director of technical market analysis with A.G. Edwards & Sons Inc. Last week, the Dow average rose 44.67 points, and the Nasdaq composite index ended 13.90 points higher for the five trading days.

“A little rest is only natural,� Goldman said.

Melcher said many market players were reluctant to make significant moves before Federal Reserve Board Chairman Alan Greenspan gives his semiannual testimony on monetary policy and the economy before the Senate Banking Committee on Wednesday.

Stocks ended mostly higher abroad. Tokyo stocks closed lower in thin trading, with the Nikkei 225-share average falling 52.51 points to 20,717.64.

In Europe, Frankfurt’s DAX 30-share average closed 4.58 points higher at 2,098.19; London’s Financial Times 100-share average finished at 3,082.0, up 7.2 points.

In Mexico City, the Bolsa index fell 6.97 points to finish at 2,274.26.

Among the market highlights:

* US West fell 1 1/4 to 40 5/8. The company said Friday that it would acquire two Atlanta cable systems. Goldman Sachs deleted the stock from its “recommended� list.

* Synergen fell 4 3/8 to 4 1/2 after it said it was discontinuing clinical trials of Antril, a drug designed to treat sepsis.

* Microsoft rose 1 7/8 to 50 1/2. The company has settled complaints stemming from a four-year federal antitrust investigation and a European Union inquiry.

* Chemicals and plastics company Rohm & Haas rose 2 1/2 to 66 3/8 after reporting strong second-quarter earnings and saying its 1994 results will be substantially above those of 1993.

* Wabash National, a maker of truck trailers, gained 2 5/8 to 52 after it reported second-quarter profit exceeding Wall Street expectations.