A late-afternoon rally pushed the stock market higher for only the second day this month. Major indexes spent most of yesterday lower as investors worried Greece could be edging closer to default.
The yield on the 10-year Treasury note hit another record low as investors piled into U.S. government debt on fears that Europe's debt crisis could spread. The euro fell to a seven-month low against the dollar.
The Dow Jones industrial average rose 68.99 points, or 0.63 percent, to close at 11,061.12. All of the gains came in the last 10 minutes of trading. The Dow had been down as many as 167 points shortly after 2 p.m. Traders said a combination of technical factors and reports that China was buying Italian government bonds triggered the late spurt of buying.
"Over the last several days, stocks have been pushed down so hard it was as if somebody was trying to push a balloon underwater," said Sam Stovall, chief investment strategist at Standard & Poor's Equity Research. "It's bound to pop up even if only for a short period of time."
The S&P 500 index rose 8.04, or 0.70 percent, to 1,162.27. It had dropped as many as 18 points. Technology stocks fared better than the overall market following news of a semiconductor deal. The tech-heavy Nasdaq composite index rose 27.10 points, or 1.10 percent, to 2,495.09.
J.J. Kirnahan, chief options strategist at T.D. Ameritrade, said reports that China planned to buy a significant amount of Italian bonds contributed to the sudden reversal. "The last 16 minutes was insane," he said.
Investors fear that Greece could default on its debt, leading to more disruptions in global financial markets. They're also concerned that rating agencies may cut the credit ratings of French banks because of their holdings of Greek bonds. That would mark the spread of Europe's debt troubles from peripheral countries like Greece and Ireland to the heart of Europe's financial system. -- AP