Sales of Treasurys invigorate stocks

NEW YORK » Wall Street showed nascent confidence in the credit markets yesterday, surging higher in response to a pullback in Treasurys and an increase in borrowing by banks. Investors saw both trends as signs that the Federal Reserve's efforts to loosen up the credit market might be working.

The Dow Jones industrial average soared more than 140 points as the 3-month Treasury bill, which earlier in the week drew massive buying as investors sought the safety of short-term government assets, fell yesterday. The selling boosted its yield to 3.66 percent, up from 3.59 percent late Tuesday and Monday's low of 2.51 percent -- an indication that stocks are no longer seen as risky as they were just a few days ago.

"It gives the market a little comfort that it's not all about buying risk-free securities," said Scott Wren, equity strategist for A.G. Edwards & Sons. "There's less of a flight to quality. ... In my mind, the pullback in the stock market is entirely due to what's going on in the credit market."

Wall Street, which has been angling for the Fed to help ease the credit crunch by cutting the benchmark federal funds rate, was knocked down several rungs in recent weeks by worries about lending troubles crimping economic and corporate growth.

Giving some investors reason to believe the steps the Fed has already taken may be enough, the nation's four biggest banks -- Citigroup Inc., JPMorgan Chase & Co., Bank of America Corp. and Wachovia Corp. -- said they each borrowed $500 million from the Federal Reserve's discount window.

Investors were also heartened that dealmaking is persisting despite credit jitters.

An affiliate of Dubai's government said it was investing $5.1 billion in casino operator MGM Mirage; Nymex Holdings Inc.'s chairman said the commodities exchange has been meeting with suitors; and mining company Rio Tinto PLC said it was able to close the loan syndication to fund its buy of Canadian miner Alcan Inc.

The Dow rose 145.27, or 1.11 percent, to 13,236.13.

Broader stock indicators also jumped. The Standard & Poor's 500 index rose 16.93, or 1.17 percent, to 1,464.05, while the Nasdaq composite index gained 31.50, or 1.25 percent, to 2,552.80.

The Russell 2000 index of smaller companies rose 10.18, or 1.29 percent, to 798.56.

Advancing issues outnumbered decliners by about 4 to 1 on the New York Stock Exchange, where volume came to 1.45 billion shares, up from 1.35 billion shares Tuesday but below last week's levels.

The dollar was mixed against other major currencies. Gold rose.

Crude oil fell 31 cents to $69.26 a barrel on the New York Mercantile Exchange.

Nymex Holdings Inc. rose $7.28, or 6.1 percent, to $126.06. A Deutsche Bank analyst raised his price target on Nymex, saying even if the exchange is not bought, it can cut costs and raise prices.

MGM Mirage rose $6.62, or 8.9 percent, to $80.94 on its deal with Dubai World.

Rio Tinto rose $14.87, or 6.1 percent, to $259.40 after closing its loan syndication, and Alcan rose 99 cents to $97.11.