NEW YORK — A rebound in commodities is drawing investors back into the stock market.
Major stock indicators rebounded Tuesday from a drop the day earlier. The Dow Jones industrials rose 51 points after losing 41 on Monday.
In an about-face, the dollar weakened against other major currencies, and commodities like oil and gold bounded higher, lifting energy and material stocks. Financial stocks also rose sharply.
The gains came as the Federal Reserve began a two day meeting on interest rates. Investors are hoping the Fed will provide a clearer indication of when it may raise rates when it issues a statement at the conclusion of the meeting today.
The Fed is widely expected to keep rates at their record low of near zero for the time being. Rock-bottom interest rates have helped fuel the market's nearly seven-month old rally, making cash plentiful and cheap and encouraging investors to buy up riskier assets.
The market appears to be following a well-established pattern where brief sell-offs are met with more buying as investors fear missing out on a continued rally.
"Reluctantly, investors are continually being dragged into a market that is finding a path of least resistance to the upside," said Art Hogan, chief market analyst at Jefferies & Co.
The consensus on Wall Street is that the economy is healing despite ongoing challenges like unemployment. But investors still have doubts over how strong the recovery will be and whether the stock market's more than 50 percent rise after 12-year lows in March accurately reflects the still-fragile state of the economy.
"Right now, it's a more orderly market," said Greg Reynholds, senior vice president of asset management at Lenox Advisors. "People are digesting the data, trying to figure out exactly where we're headed."
The Dow Jones industrial average rose 51.01, or 0.5 percent, to 9,829.87. The Standard & Poor's 500 index gained 7.00, or 0.7 percent, to 1,071.66, while the Nasdaq composite index rose 8.26, or 0.4 percent, to 2,146.30.
More than two stocks rose for every one that fell on the New York Stock Exchange, where volume came to 5.3 billion shares compared with 4.7 billion Monday.
In other trading, the Russell 2000 index of smaller companies rose 4.72, or 0.8 percent, to 620.69.
Gold and silver prices rose after three days of drops, while oil prices gained $1.69 to $71.40 a barrel on the New York Mercantile Exchange.
Commodities rose as the U.S. dollar index, which measures the greenback against a basket of foreign currencies, fell 0.8 percent, after earlier hitting a fresh low for the year.
Bond prices rose slightly. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.45 percent from 3.49 percent late Monday.
Business, Pages 28 on 09/23/2009