Stocks resume their rally

September 9, 2010 at 12:00a.m.

Associated Press

NEW YORK

Stocks resumed their rally Wednesday after a successful auction of Portuguese government debt eased worries about Europe’s financial system.

The Dow Jones industrial average gained 46 points, and broader indexes also rose. European markets reversed their losses after the results of the auction were announced.

Major indexes pulled back from their highs in the afternoon after the Federal Reserve said more regions of the country saw slower growth late in the summer.

The Fed’s “beige book” report on regional economic activity showed five of the 12 regions tracked by the Fed showed mixed or slowing activity compared with just two during the most-recent report in July.

JPMorgan Chase & Co. and other banks led the market higher, reversing a downturn from the day before. Stocks had fallen Tuesday, breaking a four-day winning streak, after news reports that European banks held larger amounts of risky government debt on their books than previously had been disclosed.

Energy stocks rose after Fitch Ratings raised its credit rating of BP. BP also released an internal report that largely spread blame from the oil spill in the Gulf of Mexico to rig owner Transocean Ltd. and contractor Halliburton Co. as well as itself.

The Dow Jones industrial average gained 46.32, or 0.5 percent, to close at 10,387.01. The Dow had been up as much as 86 points earlier in the day before paring those gains after the Fed’s regional economic report came out.

The S&P 500 index rose 7.03 or 0.6 percent, to 1,098.87, and the Nasdaq rose 19.98, or 0.9 percent, to 2,228.87

The two-day swing based on the ebb and flow of European debt fears fit into a recent pattern of jittery trading in recent weeks in response to economic news.