Stocks climb as consumer confidence rises

NEW YORK -- The stock market rebounded from an early slide Tuesday as stronger consumer confidence boosted hopes for the economy.

Stocks rose for a second day, lifting the Dow Jones industrial average about 100 points since Monday following a sharp drop of 550 points in the final three days of last week.

The latest advance began after the Conference Board said its index of consumer confidence rose to 55.9 in January from 53.6 in December. It was the third straight increase and the highest level in more than a year. Investors hope that gains in confidence will translate to increased spending by consumers.

The Dow rose nearly 60 points in late afternoon trading, boosted by a big gain in Travelers Cos. after the insurer said an absence of catastrophe costs and a recovery in its investment portfolios lifted profits 60 percent for the final three months of 2009.

The stock market started off on a weak note as China moved ahead with a plan to curb bank lending. Investors in the U.S. and elsewhere are concerned a slowdown in China's supercharged economy could destabilize a worldwide recovery.

An improved outlook on the global economy from the International Monetary Fund also brought in buyers. The IMF raised its forecast for world economic growth this year to nearly 4 percent from its previous of 3.1 percent but also said governments need to keep up stimulus efforts.

Meanwhile Federal Reserve policymakers began a two-day meeting on interest rate policy. The central bank is expected to keep rates at record lows, though investors will be looking at the Fed's assessment of the economy in a statement that will follow the meeting on Wednesday.

Stocks broke a three-day slide Monday as Fed Chairman Ben Bernanke's prospects for confirmation to another four-year term brightened. His term ends Sunday. Doubts last week about his ability to get confirmed in the Senate, combined with the White House's latest drive to clamp down on U.S. banks, led to the big drop in the market from Wednesday through Friday.

Michael Binger, portfolio manager at Thrivent Investment Management in Minneapolis, said a 5.1 percent drop in the Standard & Poor's 500 index in the final three days of last week is making it easier for stocks to resume their 10-month advance.

"When stocks get a little extended it kind of paralyzes the bulls a bit," Binger said. "Right now, stocks are not that extended."

In the final hour of trading, the Dow rose 59.63, or 0.6 percent, to 10,256.49. The Standard & Poor's 500 index rose 3.65, or 0.3 percent, to 1,100.43, while the Nasdaq composite rose 9.37, or 0.4 percent, to 2,220.17.

Advancing stocks narrowly outpaced those that fell on the New York Stock Exchange, where volume came to 746.9 million shares, compared with 730.2 million shares traded at the same point Monday.

The dollar rose against other major currencies, while gold advanced.

Crude oil fell 55 cents to $74.71 per barrel on the New York Mercantile Exchange.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.62 percent from 3.63 percent late Monday.

Dow component Travelers jumped $1.54, or 3.2 percent, to $50.43 after its report.

Technology shares got a boost from stronger profits at Apple Inc. The stock rose $6.59, or 3.3 percent, to $209.46.

The Russell 2000 index of smaller companies fell 0.57, or 0.1 percent, to 617.54.

Asian markets fell as concerns rose about Japan's economy hurting the country's bond rating. Standard & Poor's lowered its outlook on Japan's credit rating to negative from stable, saying it would slash the country's long-term rating if its economy remains weak and debt stays high.

Japan's Nikkei stock average fell 1.8 percent, while Hong Kong's Hang Seng fell 2.4 percent.

Britain's FTSE 100 rose 0.3 percent, Germany's DAX index and France's CAC-40 each advanced 0.7 percent.