Stocks rise on hopes of another Fed boost

U.S. stocks rose, reversing earlier losses and preventing the longest Dow Jones industrial average slump since 1978, as investors speculated the Federal Reserve will start another stimulus program. Ten-year Treasury notes erased gains, and the dollar slid.

The Dow halted an eight-day drop, rising 29.82 points to close at 11,896.44. The S&P 500 rose 0.5 percent, rebounding after yesterday's plunge drove the price-earnings ratio to 13.8, the cheapest in more than a year.

Ten-year Treasury yields rose 1 basis point to 2.62 percent. Oil slid to a five-week low following government data showing an increase in stockpiles.

Speculation the Fed will embark on a third round of asset purchases to stem off a recession grew after the Wall Street Journal said three former central bank officials support the approach.

More than $2.3 trillion had been erased from the value of global equities since July 22, and Treasury yields set 2011 lows, amid concern the economic recovery is faltering. Service industries grew in July at the slowest pace since February 2010, the Institute for Supply Management said Wednesday.

"Every time we see economic weakness, there will be discussion about more economic stimulus," said Richard Sichel, chief investment officer at Philadelphia Trust Co. "That could be the case given the fairly weak economic figures we've had."

Coca-Cola Co., General Electric Co. and Walt Disney Co. rose more than 1.2 percent to help lead gains in the Dow, which reversed a loss of as much as 166 points. MasterCard Inc. advanced 13 percent for the biggest gain in the S&P after profit rose 33 percent as customers' spending increased.