Stocks rally after Treasury auction
NEW YORK >> Stocks rallied yesterday after a record Treasury auction pushed bond yields lower, raising hopes that interest rates will follow and allaying fears that foreign investors would move away from U.S. debt.
Wall Street was also helped by lower oil prices and sheer momentum, as the Standard & Poor's 500 passed a price ceiling that usually triggers selling.
For the most part, however, the news that sent stocks soaring in late afternoon was nearly identical to the news that sent stocks sideways in the morning.
"We were scratching our heads," said Brian Williamson, an equity trader at The Boston Company Asset Management, a Mellon subsidiary.
Falling oil prices, which were a downward force for stocks in the morning as energy stocks fell, helped send stocks higher in the afternoon, with retail stocks rising as worries about consumer spending were temporarily forgotten.
The Dow Jones industrial average rose 93.89, or 0.89 percent, to 10,640.10. In late afternoon trading, the index was up more than 100 points.
Broader stock indicators were also higher. The Standard & Poor's 500 index rose 10.31, or 0.84 percent, to 1,230.96, and the Nasdaq composite index rose 20.87, or 0.96 percent, to 2,196.68.
Bond prices rose sharply, with the yield on the 10-year Treasury note falling to 4.56 percent from 4.65 percent late Wednesday. The U.S. dollar was mixed against other major currencies in European trading. Gold prices were higher.
Yesterday's auction of 10-year Treasury notes attracted a record level of indirect bids, which include foreign central banks. The auction came as a relief to investors who were worried after two auctions of shorter-term bond earlier this week failed to attract intense foreign demand.
Crude oil futures fell. A barrel of light crude settled at $57.75, down $1.13, in trading on the New York Mercantile Exchange.
Stocks have been crawling sideways for much of the year, and investors are itching for the kind of fourth quarter rallies they've seen the last two years. Perhaps that explains why falling oil prices, which helped push stocks lower in the morning with falling energy stocks, were a catalyst for the afternoon rally, when retailers gained as consumer spending worries were temporarily forgotten.
Exxon Mobil Corp., BP PLC, ConocoPhillips and other energy companies saw sharp drops as oil prices fell. But Target Corp. rose after its third-quarter earnings beat expectations and gasoline prices continued to fall.