Stocks Regain Some Ground

Stocks advanced Wednesday in light trading as Wall Street recovered from the previous session’s sell-off and awaited today’s expected interest rate hike by the Federal Reserve.

Traders were still nervous after the Dow Jones industrial average lost more than 120 points Tuesday on a sell-off fueled by worries about the Fed’s pending interest rate decision and its accompanying policy statement. The Fed is expected to announce at least a quarter-point rate hike, which would bring short-term interest rates to 5.25%, but a few economists expect a bolder half-point increase. Any increase would be the 17th consecutive rate hike since the Fed began to tighten credit in 2004.

There was little corporate or economic news to guide traders. J. Crew’s initial public offering at a higher-than-expected price and its subsequent run-up provided a scrap of cheer. The preppy retailer’s offering was the third-largest retail IPO ever.

Stocks have barely budged for the year despite an early run-up and, more recently, a nearly two-month slide.

“If you’re a long-term investor, I don’t think there’s been anything interesting to talk about in 2006; if you’re a short-term trader, it’s been painful,” said Stephen Wood, portfolio strategist at Russell Investment Group.

The Dow rose 48.82 points, or 0.5% to 10,973.56. The Dow plunged 120.54 points Tuesday.

Broader stock indicators also closed higher. The Standard & Poor’s 500 index climbed 6.80 points, or 0.6%, to 1,246.00, and the Nasdaq composite index rose 11.59 points, or 0.6%, to 2,111.84.

Advancing issues led decliners by about 9 to 7 on the New York Stock Exchange. Volume has been declining over the last week and a half as traders waited for the Fed’s next move.

Stocks are still struggling after a sell-off in May and early June. The tendency has been for strong market openings, followed by late-day sell-offs, or weak openings to build into buying sprees.

“That’s been very inconsistent,” said Jack Caffrey, equities strategist at J.P. Morgan Private Bank.

Treasury bond yields rose ahead of the Fed’s meeting. The 10-year T-note yield ended at 5.24%, up from 5.20% on Tuesday and matching the four-year high set Monday. The six-month T-bill ended at a five-year high of 5.30%, unchanged from Tuesday.

The government sold $14 billion of new five-year notes at a yield of 5.20%.

In other market highlights:

* Energy was the strongest sector of the day, as oil company shares advanced after U.S. Energy Secretary Samuel Bodman said he had authorized crude oil loans from the nation’s Strategic Petroleum Reserve to two Louisiana refineries that had been forced to curtail production because of a waterway blockage.

Exxon Mobil rose $1.47 to $61.12, Chevron added $1.26 to $61.36 and ConocoPhillips picked up $1.39 to $64.14. Crude oil futures rose 27 cents a barrel to $72.19 in New York trading.

* Among Southland issues, Camarillo-based Vitesse Semiconductor rebounded in trading in the so-called pink sheets market, one day after the stock was delisted by Nasdaq. Vitesse rose 25 cents to $1.45.

Nasdaq delisted the stock because the company has failed to file its quarterly report for the three months ended March 31. Vitesse has delayed its reports as it investigates previous stock option grants to executives. The company is one of dozens that have come under scrutiny for previous options practices.

* Calabasas-based Cheesecake Factory plunged $1.96 to $25.78, bringing the stock’s decline year to date to 31%. The restaurant company late Tuesday warned that sales in the second quarter would be weaker than expected. Banc of America Securities cut its target price for the stock to $30 from $35.

* Bausch & Lomb rose $2.40 to $49.81 after an American Medical Assn. study found that most patients suffering from an eye infection thought to be caused by the company’s contact lens solution practiced poor lens hygiene, such as sleeping with lenses on.

* Wintegra scrapped its initial public offering and Gordon Biersch Brewery Restaurant Group delayed its share sale after the companies failed to attract enough investors, said bankers involved in the deals.

Wintegra, a semiconductor maker based in Austin, Texas, planned to raise $70 million, and Biersch, a chain of restaurants and breweries based in Chattanooga, Tenn., intended to sell $54.2 million of stock.

Another highly anticipated IPO, ethanol producer Aventine Renewable Resources, priced its offering at $43 a share late Wednesday, at the top end of the expected range of $40 to $43. The stock will begin trading today on the NYSE under the ticker symbol AVR.

Bloomberg News was used in compiling this report.