MARKET SNAPSHOT: U.S. Stocks Close Higher, Paced By Energy And Financial Shares

By Kate Gibson

U.S. stocks on Wednesday stepped higher as investors found reason for economic hope in a July rise in orders for U.S. durable goods, with a spike in the price of crude viewed as temporary in light of storm conditions in the Gulf of Mexico.

"When we think about some of the details [of the durable-goods report], the basis for optimism isn't that great, but the market's reaction shows the market may be ready to embrace better news," said Tony Crescenzi, a market analyst at Miller Tabak & Co.

Up four of the past five trading days, the Dow Jones Industrial Average (DJI) seesawed in and out of positive territory before adopting a firmer tone to close at 11,502.51, up 89.64 points, or 0.8%, with 25 of its 30 components closing in the green.

The blue-chip index so far has gained 1.1% since the start of August, readying it for a second straight month of gains.

For the year, the Dow is down 13.1% after tallying monthly declines for five out of the year's first seven months.

"The feel in the air is not that the situation is a lot better, but that the rate of deterioration may have slowed. In this environment, that's enough to create optimism," said Crescenzi

BOND REPORT: Treasurys Gain After Two-year Auction

By Deborah Levine

Treasurys gained Wednesday, reversing earlier losses, after the government saw sufficient demand for its largest two-year note auction in more than a decade.

Two-year note yields fell (UST2YR) 6 basis points, or 0.06%, to 2.28%.

The Treasury Department sold $32 billion of notes maturing in August 2010 to yield 2.38%.

Indirect bidders, a class of investors that includes foreign central banks, bought 29.5% of the sale, pretty close to the average of 30.4% in the last four auctions. Some traders said that's encouraging since it was the largest auction since at least 1992.

Investors bid $2.18 for every dollar offered, the lowest since February.

The government will also sell $22 billion in five-year notes tomorrow, the most since the Treasury began issuing the debt monthly instead of quarterly in 2003.

Durable goods

Treasurys has been under pressure earlier due to rising crude-oil prices and a report that showed a rise in the U.S. orders of durable goods in July.