September 15th, 2010
07:59 PM ET

Stocks rise as Japan gives dollar a boost

A look at highlights from the day's business news:

Stocks end higher on dollar moves

Stocks surged in the last half hour of trading to close higher Wednesday, tracking the U.S. dollar's strength after Japan moved to rein in the surging yen.

The Dow Jones industrial average rose 46 points, or 0.4 percent, to close at 10,572.73. The Nasdaq added 12 points, or 0.5 percent, to end at 2,301.32, and the S&P 500 ticked up 4 points, or 0.4 percent, to settle at 1,125.07.

Energy and technology shares had been lower earlier in the session, dragging down the broader indexes, but they turned mixed in the last hour of trade. Housing shares remained mostly lower.

Foreign exchange rates were in the spotlight after the Japanese government's first jump into the currency market since 2004. The yen rose to a fresh 15-year high against the dollar Tuesday, prompting recently re-elected Japanese Prime Minister Naoto Kan to announce the nation will sell yen and buy dollars. The move boosted the dollar Wednesday.

High supply, low demand: Oil prices under pressure

As the U.S. dollar gains strength and crude inventories remain high amid low demand, oil prices are coming under pressure.

Prices are down slightly this week, sinking 1 percent Wednesday after the Japanese government announced it would sell yen and buy U.S. dollars in an attempt to rein in its rising currency.

The nation's move to intervene in the currency markets pushed the greenback up more than 3% versus the yen early Wednesday, sending oil - which is priced in U.S. dollars - sharply lower.

Meanwhile, traders continued to worry about a glut in inventories.

A report late Tuesday from the American Petroleum Institute showed an unexpected build in crude supplies last week, while the more closely watched inventory report from the Energy Information Administration showed that supplies fell.

Treasury yields mixed on Japan currency move

Treasury yields were mixed Wednesday as investors responded to the Bank of Japan's decision to intervene in the currency market, along with mixed reports on U.S. manufacturing activity.

Japan's Ministry of Finance announced that the Bank of Japan would sell yen and buy U.S. dollars in its first currency intervention since 2004. The goal is to curb the meteoric rise of the yen, which has been a major source of concern for Japan's export-driven economy.

The move raised speculation in the Treasury market that the Bank of Japan could reinvest U.S. dollars into short-term U.S. bills, said Kim Rupert, a fixed-income analyst at Action Economics. She estimated that the total value of the intervention was about $12 billion.

While the currency intervention weighed on yields for short-term maturities, the longer end of the curve was supported by mixed economic news.

The yield on the benchmark 10-year note rose to 2.74 percent, from 2.67 percent late Tuesday. The 30-year bond advanced to 3.87 percent, up from 3.80 percent; and the five-year edged up to 1.45 percent from 1.43 percent. The two-year yield eased to 0.49 percent from 0.50 percent late Tuesday.

- reporters Julianne Pepitone, Blake Ellis and Ben Rooney contributed to this report.

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