FINANCIAL MARKETS : Dow Gains 26.92; Bond Yields Retreat

Snapping a five-session string of losses, blue-chip stocks closed higher Thursday, as the market found relief from lower long-term bond interest rates.

The Dow Jones industrial average rose 26.92 points to 3,875.15, after falling nearly 88 points over the previous five sessions.

In the Treasury bond market, yields retreated to 8.04%, pushing its price up 3/16 point as traders jockeyed for position ahead of today’s release of third-quarter gross domestic product data. The long bond ended at 8.05% on Wednesday.

Analysts said the easing of pressure from the bond market allowed investors to focus on strong third-quarter earnings from companies such as Dow Chemical Co. and Delta Air Lines Inc.

In the broader market, advancing issues outnumbered decliners by about 4 to 3 on the New York Stock Exchange, where volume totaled 327.78 million shares, up slightly from 322.57 million on Wednesday.

Broad-based stock indexes also gained. The NYSE’s composite index rose 1.66 points to 255.57. The Standard & Poor’s 500-stock index rose 3.23 points to 465.85. The Nasdaq composite index rose 4.23 points to 767.47.

Stocks also got a boost from the dollar, which gained against the German mark and the Japanese yen. The U.S. currency closed in New York at 96.98 yen and 1.499 marks, up from 96.85 and 1.491, respectively, on Wednesday.

The market is “holding its breath until” today, said John Shaughnessy, research director at Advest Inc. in Hartford, Conn.

Third-quarter GDP growth is estimated at 2.8%. Anything higher than that would indicate a robust growth in the economy that is likely to further encourage the Federal Reserve Board to increase short-term interest rates.

Larry Wachtel, market analyst at Prudential Securities, said a tightening is virtually assured, unless the GDP numbers come in much weaker than expected.

Among the market highlights:

* Dow Chemical rose 1/2 to 73 5/8 after the company beat Wall Street expectations with its third-quarter profit.

* Delta Air Lines and UAL (parent of United Airlines) reported unexpectedly strong quarterly results. Delta gained 2 1/2 to 49 1/4 and UAL rose 3 3/4 to 89.

Both airline stocks helped pushed the Dow Jones transportation average up 24.45 points, or 1.66%, to 1,495.32.

* Fisher Scientific International tumbled 6 3/8 to 27 3/8 on disappointing quarterly earnings.

* Texas Instruments jumped 2 3/8 to 73 3/4, boosted by a Merrill Lynch upgrade. Cisco Systems rose 1 to 30 and Microsoft was up 5/8 to 61 5/8. Micron Technology rose 1 to 39 3/8 and Intel rose 1/2 to 60 1/2.

* Xerox fell 6 3/8 to 102. A Smith Barney analyst said the company’s revenue growth for the third quarter was less than expected.

* California Micro Devices gave back 1 1/8 to 5 7/8 after saying its chairman resigned and it was being investigated by the Securities and Exchange Commission.

* Mobil rose 1 1/8 to 85 and Amoco rose 3/4 to 61 5/8, after Dean Witter Reynolds upgraded the stocks.

Overseas stock markets were mostly higher. In Europe, London’s Financial Times 100 average closed up 29.7 points at the day’s high of 3,029.6, while Frankfurt’s 30-share DAX average lost 7.30 points to end at 2,013.20. Tokyo’s 225-share Nikkei average finished at 19,796.36, up 50.01 points, and Mexico’s Bolsa index was 12.29 points higher at 2,592.29.