NEW YORK -- Stocks bounced back sharply today as investors quickly dismissed yesterday's pangs about inflation and interest rates. Dow gains 51
The Dow Jones industrial average added 50.97 points to close at 7,136.62, led by a big gain from IBM Corp. Earlier in the afternoon, the Dow was up almost 130 points, nearly erasing yesterday's 140-point plunge.
Advancers led decliners by a 9-to-7 margin on the New York Stock Exchange, with 1,438 up, 1,105 down and 804 unchanged. NYSE volume was 534.11 million shares vs. 497.57 million yesterday.
Broader stock indicators also pulled back before the close, but ended with sizable gains.
The Standard & Poor's 500 list rose 4.66 to 820.28, and the NYSE's composite index gained 1.95 to 426.90. The Nasdaq index rose 7.89 to 1,330.80, and the American Stock Exchange composite index gained 0.45 to 570.95.
Stocks opened the day lower, threatening to extend yesterday's selloff, amid pressure from the bond market, where long-term interest rates nearly pushed back above 7 percent before retreating.
Bellwether technology shares led the market's rally, benefiting from an upbeat presentation to securities analysts by IBM Chairman Louis Gerstner. IBM surged back toward a nine-year high, wiping out the remnants of a steep slide that began in late January.
Bond prices initially fell this morning, boosting the yield on the 30-year Treasury to 6.99 percent. But as bonds recovered, the long-bond yield -- a key determinant of borrowing costs -- fell to 6.92 percent.
Yesterday stocks fell sharply as the yield rose to 6.95 percent amid renewed inflation concerns that so recently plagued the market. Notably, the Federal Reserve issued a report saying there were new signs of upward wage pressures -- the leading force behind inflation -- as labor markets remained tight in April.
Stocks and bonds plunged in the early spring after the Fed raised one of the central bank's key lending rates, hoping to ease inflationary pressures by slowing the pace of borrowing and spending.
But the markets rallied back last week amid indications that employment costs have remained under control, bolstering arguments that the Fed won't need to raise rates repeatedly, choking company profits.