- The Washington Times - Monday, May 15, 2006

NEW YORK (AP) — A late-day rebound left stocks mixed yesterday 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 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 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 increases 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 the session.

At the close, the Dow Jones Industrial Average added 47.78, or 0.42 percent, to 11,428.77, after sliding as much as 48 points earlier in the day.

Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 Index rose 3.26, or 0.25 percent, to 1,294.50, and the Nasdaq Composite Index lost 5.26, or 0.23 percent, to 2,238.52.

Bonds leaped on the weak manufacturing data, with the yield on the 10-year Treasury note dropping to 5.15 percent from 5.2 percent late Friday. Although the dollar took back some losses against the Japanese yen, traders fretted that a continually weak dollar could feed inflation; when the dollar is down, more of the U.S. currency is needed to buy foreign-made goods.

Elsewhere, gold prices dropped from 26-year highs to about $685 an ounce.

Another steep dropoff in crude futures helped support stocks after the International Energy Agency last week reduced its forecast for global oil demand. A barrel of light crude sank $2.63 to settle at $69.41 on the New York Mercantile Exchange.

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