Stocks rally after wobbly start

Wall Street rallied Wednesday, reversing the Dow Jones industrial average’s three-day losing streak, but investors still appeared skittish ahead of the Federal Reserve’s interest rate decision.

Stocks initially dropped after the Commerce Department said orders for durable goods plunged 2.8 percent in May following three months of increases. Later, the market shrugged off the report and clawed its way back up, boosted by some takeover deals and strong earnings reports, particularly from ConAgra Foods Inc. and software maker Oracle Corp.

Given the market’s turbulence over the past few weeks due to soaring bond yields, investors will be looking for any clues in the central bank’s statement Thursday about policy makers’ views on growth and inflation.

The Fed — which is expected to keep the benchmark rate steady at 5.25 percent after its two-day meeting ends Thursday — has stated recently that it expects the economy to recover from a weak first quarter despite difficulties in the housing market, and that inflation remains a paramount concern.

“We’d like to hear a Fed that’s much closer to the center, because they’re still pretty hawkish. They sound closer to tightening than to easing,” said Arthur Hogan, chief market analyst at Jefferies & Co. Rate hikes tend to slow down business and can dampen corporate profits.

The Dow rose 90.07, or 0.68 percent, to 13,427.73, after dropping 77 points earlier in the day. The blue-chip index had lost a total of 208 points in the previous three sessions.

Broader indexes also rose. The Standard & Poor’s 500 index gained 13.45, or 0.90 percent, to 1,506.34, and the Nasdaq composite index jumped 31.19, or 1.21 percent, to 2,605.35.

Treasury bond prices finished slightly lower after the weak durable goods data. The 10-year Treasury note’s yield slipped to 5.08 percent from 5.09 percent late Tuesday.

On Thursday, all eyes will be on the Fed’s statement.

“If they change the statement, people will pick up on that, no doubt. No matter what the change is, people will think it means something,” said Janna Sampson, director of portfolio management at Oakbrook Investments.

Much of the choppiness in the market, though, has been from people simply rebalancing their portfolios as the second quarter ends and ahead of the July Fourth holiday week, Sampson added.

“We’ve got that internally here, people moving money around. We’re heading into a pretty quiet week next week — people are trying to get their houses in order before going on vacation,” she said.

The Russell 2000 index of smaller companies rose 12.33, or 1.49 percent, to 838.46.

Advancing issues outnumbered decliners by about 3 to 1 on the New York Stock Exchange, where consolidated volume came to 3.35 billion shares, up from 3.26 billion shares Tuesday.

Crude oil futures for August delivery rose $1.20 to $68.97 a barrel on the New York Mercantile Exchange after the government said U.S. gasoline inventories dropped last week.

The dollar was mixed against other major currencies. Gold slipped.

Overseas, Japan’s Nikkei stock average fell 1.20 percent, and the sometimes-volatile Shanghai Composite Exchange rose 2.65 percent. Britain’s FTSE 100 fell 0.48 percent, Germany’s DAX index fell 0.75 percent, and France’s CAC-40 fell 0.20 percent.