Stocks Soar Back as Treasury Yields Drop

U.S. stocks on Tuesday surged the most in two years after its worst day since 2008, as a divided Federal Open Market Committee said benchmark rates would stay near zero through mid-2013. After relinquishing 634.76 points, or 5.6%, in Monday’s battering, the Dow industrials rallied back, gaining 429.92 points, or 3.98%, to 11,239.77. The S&P 500 added 53.07 points, or 4.74%, at 1,172.53. The Nasdaq Composite added 124.83 points, or 5.29%, at 2,482.52.

The Fed announced it would keep interest rates, now near 0%, at ultralow levels at least through mid-2013 — the first time it put a time frame on its low-rate stance. The monetary committee also lowered its outlook for the pace of recovery, and discussed a range of policy tools to stimulate growth.

Crude-oil supplies declined 5.2 million barrels on the week ending Aug. 5, the American Petroleum Institute said late Tuesday. Crude prices settled 2.5% lower and under $80 a barrel on Tuesday as investors remained concerned about prospects for the world economy and an equities selloff added to such worries. Oil for September delivery declined $2.01 to finish at $79.30 a barrel, the lowest price since late September.

Media conglomerate Walt Disney Co.said Tuesday that its fiscal third-quarter earnings rose 11% on increased revenues at ESPN and its theme parks. The company said it earned $1.48 billion, or 77 cents a share, compared with a profit of $1.33 billion, or 67 cents a share, in the same period a year ago. Revenue rose 7% to $10.68 billion.