Stocks Rally to Close Well Off Their Session Lows

However, the Treasury market remained solidly lower, posting a loss of over a point.
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Major stock proxies, which did a midafternoon swoon with bonds, managed to reverse course and close well off their worst levels of the day, putting a better spin on a mostly rocky beginning to October.

The

S&P 500

actually managed to close in positive territory after trading as low as the 1265.85 level during the session. While the rally didn't have enough juice to push the rest of the major market averages into the green, stocks finished in a lot better shape than bonds, which got crushed. The 30-year Treasury bond's yield jumped to 6.14%.

Stocks, which opened softer, were pressured further in part by a stronger-than-expected reading on manufacturing activity, igniting fears of more interest-rate hikes by the

Fed

.

Around 2:20 p.m. EDT, major stock proxies hit their session lows and began a nice rally off the bottom, eventually paring a great deal of their losses on the day.

On the economic front, the report that soured both markets came via the

Purchasing Managers' Index

for September, which rose to 57.8 from 54.2 in August and came in above expectations. Economists polled by

Reuters

projected the index to come in at 54.3. The prices index of the report didn't help those worried about inflation pressures. The prices index surged to 67.6 in September from 59.8 in August.

The data sparked renewed worries that the

Federal Open Market Committee

will raise interest rates, perhaps even as soon as next week's meeting. However, the majority of economists don't think that will happen. The FOMC has hiked rates twice this year in an effort to cool off the economy. While most economists think the Fed won't tighten next week, some think the Fed will move to a tightening bias.

On the

New York Stock Exchange

, decliners pummeled advancers 1,797 to 1,253 on 894.7 million shares. On the

Nasdaq Stock Market

, losers beat winners 2,165 to 1,789 on 968.1 million shares.

On the NYSE, 158 issues set new 52-week lows while 33 touched new highs. On the Nasdaq, 111 issues set new 52-week lows while new highs totaled 40.

On the Big Board,

Williams Communications Group

(WCG) - Get Report

was most active with 17.4 million shares changing hands in its trading debut. It was up 22% to 28 1/16. Its IPO was priced yesterday at $23 a share.

On the Nasdaq,

Dell

(DELL) - Get Report

was most active with 43.3 million shares changing hands. It was up 5/8 to 42 17/32. Dell was downgraded today by

BancBoston Robertson Stephens

.

Market data above are preliminary. Updated numbers and analysis will follow in the Market Roundup

Earlier...

2:57 p.m.: Stocks Remain Solidly Lower After NAPM Data

With the 30-year Treasury bond trading around its session lows, stocks couldn't resist following as major market averages made new intraday nadirs before bouncing a little bit off their new bottoms.

2:13 p.m.: Renewed Rate Concerns Keep Stocks, Bonds Submerged

Stocks and bonds were suffering some significant damage in the wake of a stronger-than-anticipated reading on manufacturing activity, which sparked anew fears of more interest rate hikes by the

Fed

.

1:08 p.m.: Midday Musings: Much-Feared Trading Month Gets Off to Rough Start

12:03 p.m.: NAPM Data Continue to Pressure Stocks

Stocks and bonds needed a pretty good reason if they weren't going to go lower today. Today's

National Association of Purchasing Management

survey wasn't it.

11:03 a.m.: Stocks Solidly Lower After NAPM Data

Stocks and bonds were getting comfortable deep in negative territory at midmorning amid a hotter-than-expected

National Association of Purchasing Management

survey.

9:53 a.m.: Stocks Mildly Lower After Yesterday's Solid Rally

Stocks were selling off after posting a solid advance yesterday as market players await the release of the

National Association of Purchasing Management's

survey of manufacturing conditions due out at 10 a.m. EDT.