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US, European stock markets up

13 August 2009 09:31 (UTC +04:00)

Baku- APA-Economics. Investors seized on a buying opportunity Wednesday, picking up bargain stocks after a big pullback, AP reported.
Stocks jumped in light trading Wednesday as investors awaited the Federal Reserve’s interest rate announcement. Major stock market indicators rose more than 1 percent, including the Dow Jones industrial average, which gained 125 points to reverse a sharp slide Tuesday.
For months, investors have been looking for evidence that the economy is strengthening and pulling out of recession. Traders pay particular attention to the Fed’s assessments of the economy. The latest is due at 2:15 Eastern when the central bank concludes a two-day meeting on interest rates.
In midafternoon trading, the Dow rose 125.83, or 1.4 percent, to 9,367.28. The Standard & Poor’s 500 index rose 12.81, or 1.3 percent, to 1,007.16, while the Nasdaq composite index gained 32.46, or 1.7 percent, to 2,002.19.
About four stocks rose for every one that fell on the New York Stock Exchange, where volume came to 613.4 million shares, compared with 686.1 million shares traded Tuesday. Light volume price moves and could be overstating investors’ enthusiasm ahead of the Fed decision.
Meanwhile, bond prices fell after an auction of $23 billion in 10-year Treasury notes saw demand in line with recent levels but down from last month. The Treasury Department is auctioning a record $75 billion in debt this week.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.73 percent from 3.70 percent ahead of the auction results and 3.67 percent late Tuesday. Bond prices jumped Tuesday as stocks fell.
Investors will track demand because a drop in buyers could force the government to increase its payout. The results rise in rates would raise borrowing costs for consumers and could slow a recovery in the economy.
Larry Rosenthal, president at Financial Planning Services in Manassas, Va., said investors are eager to see what the Fed might say about inflation. Fears about rising prices due to an increase in government debt could force policymakers to boost rates.
The dollar was mixed against other major currencies, while gold rose.
Benchmark crude rose $1.22 to $70.67 a barrel on the New York Mercantile Exchange.
The Russell 2000 index of smaller companies rose 12.26, or 2.2 percent, to 574.38.
Overseas, Britain’s FTSE 100 rose 1 percent, Germany’s DAX index added 1.2 percent, and France’s CAC-40 jumped 1.5 percent. Japan’s Nikkei stock average fell 1.4 percent.