Dow up 47 points as oil and gold sink

A late rebound left US stocks modestly higher on Wall Street today as oil and gold prices tumbled and mild economic data lifted bonds from their recent lows.

News of a slowdown in manufacturing activity in the New York region brightened the outlook for US interest rates and helped bond yields retreat from four-year highs.

A drop in first-quarter existing home sales also reinforced views that interest rates have been raised enough to clamp down on economic growth.

But the day’s up-and-down trading was evidence of investors’ persistent unease over inflation and interest rates after the Federal Reserve said last week that more rate hikes could be needed to battle soaring commodities prices.

Weakness in global stock markets and a languishing dollar overshadowed a steep plunge in crude oil throughout most of today’s session.

“I think what we’re seeing here is the fear factor escalating,” Peter Cardillo, chief strategist and market analyst at SW Bach & Co, said of the market’s inflation and interest rate worries. “I think we’re in the midst of a mini-correction that could take us down about 5%.”

Cardillo said the market could remain in neutral ahead of key wholesale and consumer inflation reports tomorrow and Wednesday. However, he cautioned that further declines in bond yields might trigger more selling in the near term.

The Dow Jones industrial average added 47.78, or 0.42%, to close at 11,428.77, after sliding as much as 48 points earlier in the session.

Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 index rose 3.26, or 0.25%, to 1,294.50, and the Nasdaq composite index lost 5.26, or 0.23%, to close at 2,238.52.