Wall Street Rebounds With Late-Day Spurt

Stocks bounced back late Tuesday from early losses, helped by a decline in Treasury bond yields.

The Dow Jones industrial average, down as much as 84 points at its low for the day, rallied to close with a gain of 22.81 points, or 0.2%, at 9,340.45.

The Nasdaq composite added 6.34 points, or 0.4%, to 1,770.65, and the Standard & Poor’s 500 index was up 3.02 points, or 0.3%, to 996.73.

Winners topped losers by 9 to 7 on the New York Stock Exchange and by 16 to 15 on Nasdaq.

The economic news was encouraging, but it didn’t help stocks for much of the session.

The government said orders to manufacturers for big-ticket products rose for the second straight month in July, adding to recent evidence that the economy is accelerating.

The Treasury bond market reacted badly to that news early on, driving yields up to one-year highs. The two-year T-note yield rose to nearly 2% from 1.96% on Monday. The 10-year T-note rose as high as 4.61% from 4.53% on Monday.

But yields tumbled later in the day, which gave stocks some breathing room, analysts said. The 10-year T-note ended at 4.48%.

John O’Donoghue, a trader at Credit Suisse First Boston in New York, said a major investor stepped in to buy bonds Tuesday in a so-called asset allocation trade, shifting capital from stocks to bonds.

“The 10-year Treasury note is starting to offer respectable value, especially compared to where it’s been,” Zane Brown, head of taxable fixed-income at Lord, Abbett & Co. in Jersey City, N.J., told Bloomberg News.

The 10-year T-note was at 3.11% in mid-June and 3.98% in mid-July.

Some analysts said markets probably would continue to be volatile this week, with volume low as many players take the last of their summer vacation.

In other markets, near-term gold futures in New York posted their biggest gain in two weeks, rising $4.50 to $365.80 an ounce. Analysts said the metal’s rise was tied to technical trading in the dollar.

Among Tuesday’s highlights:

* Xerox jumped 85 cents, or nearly 9%, to $10.39 after investment research firm SG Cowen upgraded the copier company’s stock to “strong buy,” citing improving sales.

* Some computer networking stocks attracted buyers. Black Box rose 58 cents to $44.86, Juniper Networks gained 47 cents to $16.37, and 3Com was up 24 cents to $5.42.

* Kraft Foods fell 25 cents to $29.07 despite raising is quarterly cash dividend 20% to 18 cents a share. The stock’s annualized dividend yield is 2.5%.

* Sporting goods retailer Sports Authority surged $2.48 to $32.50. Brokerage U.S. Bancorp raised its 12-month target price for the stock to $41 after the firm’s chief executive gave an upbeat outlook on CNBC.

* On the downside, Catalina Marketing, which provides coupons and marketing services, sank $2.57 to $12.58 after saying its auditor, Ernst & Young, resigned after identifying certain issues with some of the company’s accounting.

* Biotech firm Myriad Genetics slid $2.01 to $12.35 after brokerage Credit Suisse First Boston cut its rating on the shares to “neutral” after the company reported a wider loss for its recent fiscal year.

Market Roundup, C6-7