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Stocks sharply higher as Wall Street goes hunting for bargains

Stocks sharply higher as Wall Street goes hunting for bargains

Stocks advanced Wednesday as investors scooped up bargains after the previous session's huge tumble.
Though investors remain uneasy about shrinking credit and its effect on the economy, many still expect the Federal Reserve to cut interest rates at its next meeting on Sept. 18, or even sooner. That gives them some hope that the stock market will recover from its summer volatility, and that right now, it is a good strategy to buy while the buying is cheap.
The Fed, although it has not yet indicated that it will lower the benchmark fed funds rate, has been adding cash to the banking system in an attempt to keep the credit markets liquid. The Federal Reserve Bank of New York said Wednesday that it would inject $5.25 billion (euro3.85 billion) through a one-day repurchase agreement, where it buys that amount in collateral from dealers who then deposit the money into commercial banks.
With little economic data expected Wednesday, investors will likely be focused on the performance of the credit markets and corporate news. One headline the market is anticipating is Altria Group Inc.'s announcement of a spinoff of its cigarette business, Philip Morris International.
The Dow rose 74.54, or 0.57 percent, to 13.116.39, after falling 280 points on Tuesday.
Broader stock indicators also rose. The Standard & Poor's 500 index added 6.81, or 0.48 percent, to 1,439.17, while the Nasdaq composite index gained 15.26, or 0.61 percent, to 2,515.90.
Bonds slipped, indicating that some investors were being lured away from safe government securities to riskier assets including stocks. The yield on the benchmark 10-year Treasury note was at 4.53 percent, up from 4.52 percent late Tuesday, while the yield on the 3-month Treasury bill rose to 4.21 percent to 4.18 percent.
On Tuesday, the stock market gave back some of the robust gains it made last week as investors grew nervous again about the strength of the economy and whether the Fed will act in an effort to prevent credit troubles from spreading further.
Wall Street's plunge Tuesday triggered selling in Asia. Japan's Nikkei stock average fell 1.69 percent, Hong Kong's key index fell 1.5 percent, and China's Shanghai Composite Index fell 1.64 percent.
Light, sweet crude rose 70 cents to $72.43 a barrel on the New York Mercantile Exchange ahead of the U.S. Energy Department's weekly inventory report.
The dollar was mostly lower against other major currencies, while gold prices rose.
Altria rose $1.05 to $70.12 as the market anticipated a Philip Morris spinoff.
The technology sector was strong, helping to boost the Nasdaq, after several analysts raised their price targets on Seagate Technology. Late Tuesday, the hard disk drive maker boosted its outlook for the fiscal first quarter above analyst forecasts. Seagate rose $1.36, or 5.6 percent, to $25.82.
The housing market outlook remains weak, though. Mortgage application volume, refinance volume and purchase volume all fell about 4 percent during the week ended Aug. 24 compared to the prior week, according to the Mortgage Bankers Association's weekly application survey.
The Russell 2000 index of smaller companies was up 6.51, or 0.85 percent, at 774.34.
Advancing issues outnumbered decliners by nearly 4 to 1 on the New York Stock Exchange, where volume came to 144.4 million shares.


Updated : 2021-04-12 12:20 GMT+08:00