The stock market is again taking its cues from the bond market.
Stocks turned higher this afternoon after solid demand at a Treasury auction eased fears that the appetite for U.S. debt would dry up and force the government to pay higher interest rates to entice buyers. That in turn could endanger an economic recovery by driving borrowing rates higher for loans on homes, cars and other major purchases.
In midafternoon trading, the Dow Jones industrial average rose 55.67, or 0.7 percent, to 8,355.69. The broader Standard & Poor’s 500 index rose 11.02, or 1.2 percent, to 904.08, and the Nasdaq composite index advanced 13.44, or 0.8 percent, to 1,744.52.
Interest rate movements were tugging at the stock market for a second straight day. Investors were relieved that a $26 billion auction of 7-year notes went well today, a day after sending long-term Treasurys plunging on fears that the government could eventually exhaust buyers’ appetite for debt with an unprecedented level of bond sales.
The yield on the 10-year note, a key benchmark for home mortgages and other loans, edged down to 3.73 percent from 3.75 percent the day before. The yield, which moves in the opposite direction from the price of the note, reached its highest level since November on Wednesday.
Stock trading was choppy today, with indicators falling in the early going on disappointing news on new home sales and foreclosures, while energy shares drew support from crude oil’s advance to a six-month high above $64 a barrel.
The government said sales of new homes edged up only 0.3 percent in April, less than analysts expected. A separate report showed that a record 12 percent of mortgage holders were behind or in foreclosure in the first quarter.
Investors saw a bigger appetite for oil, as well as a dip in weekly unemployment claims and improving demand for big-ticket manufactured goods, as reasons to believe the economy will start growing and lift demand for raw materials. (AP)
