Stocks end mostly higher amid relief of lack of news

NEW YORK — Stocks closed mostly higher Monday as investors appeared relieved that little bad news emerged about risky mortgages and shrinking credit markets. Still, many on Wall Street were still seeking safety, and pressed into shorter-term Treasurys.

The market endured back-and-forth trading following a rally Friday that came in response to the Federal Reserve's decision to lower its discount rate. The Fed said at the time it stood ready to make further moves to keep credit and stock market losses from hurting the economy, but because it stopped short of a cut in the more important federal funds rate, uncertainty lingered on Wall Street Monday about policymakers' intentions. The Fed is not scheduled to meet formally until Sept. 18, which means investors could remain jittery until then.

Brian Levitt, corporate economist at OppenheimerFunds Inc., said the Fed's move, while helpful, won't erase all the market's unease.

"Fed action certainly doesn't make unsound credit sound. It allows some confidence for the higher quality deals to get done. It's more psychological. It provides confidence that the Fed will be a stopgap and a lender of last resort."

Treasury bonds, which have rallied in recent weeks as investors fled to safe-haven securities, continued their move higher Monday. Because bond prices move opposite their yields, the yields on the benchmark 10-year Treasury note fell to 4.63 percent from 4.68 late Friday, while the shorter-duration notes saw yields fall sharply as some investors wagered that the Fed might be forced to lower interest rates and therefore avoided longer-duration notes.

The Dow Jones industrials finished up 42.27, or 0.32 percent, at 13,121.35, after seeing 100-point swings higher and lower.

Broader indexes were mixed. The Standard & Poor's 500 index slipped 0.39, or 0.03 percent, to 1,445.55; the Nasdaq composite index rose 3.56, or 0.14 percent, to 2,508.59.

While Wall Street largely shrugged off layoffs at Countrywide Financial Corp. and a big sale of more liquid investments at Thornburg Mortgage Inc., stocks could face pressure Tuesday following word that Capital One Financial Corp. plans to close its wholesale mortgage business and book charges of $860 million in charges in 2007. The company, which also slashed its profit forecast, made the announcement after the closing bell.