NEW YORK (AP) _ Stocks were higher in late morning trading today, continuing a rally that began late Wednesday.

At 11 a.m., the Dow Jones average of 30 industrial stocks stood at 1,835.07, up 8.44.

Gainers outpaced losers by about 13-to-7 at the New York Stock Exchange, with 838 stocks higher, 447 lower and 464 unchanged.

Volume totalled 50.99 million shares.

Analysts said traders shaken by Wall Street's insider trading scandal began moving into quality issues on Wednesday, helping the market regain some stability after Tuesday's 43.31-point drop - its fourth-worst decline ever.

That plunge had been led by sales of issues related to takeover deals. Traders worried that the scandal might spread to some of the major investment firms that back the deals, weakening prospects that the deals would go through - and weakening demand for the stocks as well.

The analysts said they expected more buying on the basis of fundamentals, instead of the speculation that has characterized much of the market's activity in recent weeks.

Still, bargain-hunting was apparent today among ''deal'' stocks, which were showing gains after several days of losses.

Among the morning's early most active Big Board issues were Viacom International Inc., up 1 7/8 at 40 1/8 ; Gillette, up 1 1/4 at 59 and Transworld, up 1 7/8 at 37 7/8 . All have been related to takeover or restructuring activity and have suffered losses in the past few days.

IBM was up 1/8 at 123 1/8 ; Ford was up 3/8 at 57 3/8 ; Abbott Labs was up 1 1/8 at 45 1/2 , AT&T was unchanged at 25 1/2 and Hewlett-Packard was up 7/8 at 41 1/2 .

The NYSE stock index was up 0.72 at 137.34, while the American Stock Exchange Index was up 0.74 at 260.58.