NEW YORK – Stocks rose Tuesday, with the Dow swinging more than 160 points from its intraday low to its high, as the minutes of the Federal Reserve's last meeting alleviated worries about aggressive interest-rate hikes and falling oil prices reassured investors.
The Dow Jones industrial average (search) was up 59.41 points, or 0.57 percent, to finish at 10,507.97. The Standard & Poor's 500 Index (search) was up 6.55 points, or 0.55 percent, to end at 1,187.76. The Nasdaq Composite Index (search) was up 13.28 points, or 0.67 percent, to close at 2,005.40.
The Dow swung 168.85 points from its low point to its high for the session. Earlier in the day, the Dow came close to carving out a new low for 2005, falling to 10,360.92. The Nasdaq swung 37.23 points from its lowest to highest point during the session.
While the possibility of higher and more aggressive interest rate hikes remains a concern, investors were relieved to see that the Federal Open Market Committee (search), which met March 22, was willing to keep interest rate hikes minimal even as signs of inflation in the economy increased.
"What the Fed's saying here is basically that the economy is doing all right and that we've got our eye on the ball," said Bryan Piskorowski, market analyst at Wachovia Securities. "The market was going into this expecting the worst, and now that we see a little less hawkish demeanor with this announcement, the market's got some wiggle room."
The Fed hiked the nation's benchmark rate by a quarter percentage point to 2.75 percent, the seventh such increase since last summer. In keeping to their consistent pattern, Fed policy makers noted that the nation's productivity remained strong and would help keep inflation in check.
Earlier Tuesday, the government reported the trade gap widened to $61 billion in February, which surpassed analysts' estimates of $59 billion. The widening gap between U.S. exports and imports is seen as a threat that could further weaken the dollar and raise questions about the economy's strength.
"When you have a high deficit, it is more difficult to raise money and the dollar is worth less because your debt is high. What you wanted to see was a smaller trade deficit because of the competitive advantage we gain from a weaker dollar," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co.
Oil prices dropped as investors anticipated higher interest rates, which would bolster the dollar. A barrel of light crude settled at $51.86, down $1.85, on the New York Mercantile Exchange (search). Bonds rose after the Fed minutes were released, with the yield on the 10-year Treasury falling to 4.40 percent, down from 4.44 percent late Monday. The dollar made gains against other major currencies, while gold prices fell.
Stocks sensitive to high oil prices, such as industrials, rallied as crude sold off. Diversified manufacturer United Technologies Corp. (UTX) gained $1.11, or 1 percent, to $102.08, while Caterpillar Inc. (CAT) rose $1.22, or 1.4 percent, to $91.39.
Shares of eBay Inc. (EBAY) fell 31 cents, or 0.9 percent, to $33.66, amid speculation that the company's earnings and outlook coming up on April 20 may disappoint.
Verizon Communications Inc. (VZ) plans the sale of 132 million additional common shares to raise nearly $8.2 billion, which would more than cover the costs of acquiring MCI Inc. (MCIP). Verizon added 29 cents to $35.19, while MCI was up 8 cents at $26.09.
American International Group Inc. (AIG) climbed $1.10 to $53.20 after analysts at Merrill Lynch reiterated a "buy" rating on the Dow component's stock. The move came as former Chairman Maurice "Hank" Greenberg was scheduled to answer regulators' questions about the company's business practices. Greenberg's lawyers said he would invoke his Fifth Amendment rights and refuse to answer.
Auto-related companies continued to fall, in the aftermath of Ford Motor Co.'s profit warning last Friday, and General Motors Corp. warning last month. Auto-part makers fell. Visteon Corp. (VC), which gets about 70 percent of its revenue from Ford, fell 13 cents, or 2.5 percent, to $5.10. Ford (F) fell 3.6 percent, or 38 cents, to $10.06, while GM (GM) slipped 25 cents, or 0.9 percent, to $29.
Abbott Laboratories Inc. (ABT) said profits rose 1.8 percent from a year ago, and the drug maker's earnings were in line with Wall Street's forecasts. The company also reiterated its profit estimates for the rest of the year. Abbott edged 15 cents higher to $47.90.
Genentech Inc. (DNA) rose $1.12 to $57.72 even as the company reported a 61 percent hike in profits on the strength of its cancer drug sales. The biotechnology company beat Wall Street estimates by 4 cents per share, helped in part by sales of Avastin, a colon cancer treatment that has shown promise in battling other types of cancer.
Online broker Ameritrade Holding Corp. (AMTD) said its quarterly profits fell 12 percent as the number of customer transactions fell sharply. While Ameritrade still surpassed Wall Street profit forecasts by a penny per share, the company also saw a very high customer attrition rate. Ameritrade rose 15 cents to $10.85.
Overall, trading was moderate, with 1.58 billion shares changing hands on the New York Stock Exchange, above the 1.46 billion daily average for last year. About 1.93 billion shares were traded on Nasdaq, above the 1.81 billion daily average last year. Advancers outnumbered decliners on the New York Stock Exchange by about 5 to 3 and by about 8 to 7 on Nasdaq.
The Russell 2000 index of smaller companies was up 5.86, or 1 percent, at 613.03.
Overseas, Japan's Nikkei stock average fell 0.64 percent. In Europe, Britain's FTSE 100 closed down 0.54 percent, France's CAC-40 dropped 0.51 percent for the session, and Germany's DAX index lost 0.55 percent.
Reuters and The Associated Press contributed to this report.