Stocks Rise as Fed Chairwoman Says She’ll Stay the Course

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DealBook: Stocks Slump Following Weak Economic Data

Stocks Fall as Traders Prepare for Fed Moves

The stock market dropped on Monday for a fourth consecutive trading session as investors continued to worry about the recent rise in interest rates in anticipation that the Federal Reserve would soon begin to wind down its huge economic stimulus.

The Dow Jones industrial average dropped 70.73 points, or 0.47 percent, to 15,010.74. The Standard & Poor’s 500-stock index lost 9.77 points, or 0.59 percent, to 1,646.06. The Nasdaq composite index fell 13.69 points, or 0.38 percent, to 3,589.09.

Investors had little data to digest on Monday, so the focus for many remained the continuing climb in bond yields. The yield on the 10-year Treasury note rose to 2.88 percent, from 2.83 percent Friday, as the note’s price declined 15/32, to 96 23/32.

The 10-year Treasury yield has risen sharply from a low of 1.63 percent reached in early May as the economy has improved and as investors begin expecting the Fed to start tapering its $85 billion-a-month bond-buying program as early as next month.

“We’ve been in this artificially low interest rate environment for so long, it’s hard to figure out what normal is,” said Jim Dunigan, chief investment officer with PNC Wealth Management.

The quick rise in bond yields has worried some investors because it leads to higher interest rates on many kinds of loans, including home mortgages and corporate loans.

“I do think we’re not too far away from that point in time where this heavy increase in bond yields is going to start impacting the markets,” said Doug Peebles, chief investment officer of AllianceBernstein Fixed Income.

Home builders were hit hard on Monday as traders were concerned that higher mortgage rates could upset a recovery in the housing market. Lennar, PulteGroup and D.R. Horton all fell roughly 4 percent.

Bank stocks dropped after a report from the Federal Reserve appeared to indicate that large bank holding companies — including JPMorgan Chase, Citigroup, Bank of America — may need to raise additional capital. JPMorgan fell $1.46, or 2.7 percent, to $51.83, while Bank of America lost 27 cents, or 1.9 percent, to $14.15. Morgan Stanley dropped 66 cents, or 2.5 percent, to $25.81.

Wall Street will be focused on the Fed this week, trying to forecast its intentions. On Wednesday the Federal Reserve will publish the minutes of its July policy meeting, and on Thursday the Fed starts its annual conference in Jackson Hole, Wyo.

Stocks & Bonds: Surge in Commodities Prices Helps End Slump on Wall St.

Mining companies and others dealing in commodities helped pull the stock market out of a three-day slump on Thursday.

News that China’s trade rebounded last month signaled the end of a six-month slowdown for the world’s biggest buyer of raw materials. The report drove prices up for copper and other commodities, and that helped lift Newmont Mining, Freeport-McMoRan and other stocks in the materials industry.

“The one thing that stands out today is the better news out of China,” said David Joy, the chief market strategist at Ameriprise Financial. “It comes as a pleasant surprise.”

The Standard & Poor’s 500-stock index edged up 6.57 points, or 0.4 percent, to 1,697.48.

The Dow Jones industrial average rose 27.65 points, or 0.2 percent, to 15,498.32. The Nasdaq composite gained 15.12 points, or 0.4 percent, to 3,669.12.

With little other news to drive trading, the stock market had meandered lower this week. The S.& P. 500 fell three days straight and remains down 0.7 percent for the week. It is still up 19 percent this year.

Brad McMillan, chief investment officer for Commonwealth Financial Network in Waltham, Mass., said a number of concerns weighed on the market this week. Comments from Federal Reserve officials have convinced many investors that the bank will begin pulling back its support for the economy in the coming months.

In an interview on CNBC after the market closed, Richard W. Fisher, head of the Fed’s Dallas branch, reaffirmed his view that it was time to wind down the bank’s stimulus effort.

At the same time, companies are warning of slower sales and turning in tepid second-quarter results. Mr. McMillan said it was starting to look as though corporate earnings had not kept up with the stock market’s strong pace this year.

“I think people are realizing that stock values are getting disconnected from earnings growth,” Mr. McMillan said. “For the rally to continue, people will have to pay more for earnings that aren’t growing that much.”

Investors are paying more for profits. A year ago, the price-earnings ratio for the S.& P. 500 was 13.4, according to the data provider FactSet. Now it is 15.6, which is still near the long-run average.

In other trading on Thursday, the better economic news out of China sent copper, widely used for electronics and to wire buildings, up 10 cents, or 3 percent, to $3.27 a pound. Gold rose $24.60, or 2 percent, to $1,309.90 an ounce.

In the bond market, the price of the 10-year Treasury note rose 10/32, to 93 1/32, while its yield fell to 2.59 percent, from 2.60 late Wednesday.

Stocks Sag on Wall Street

Stocks fell sharply Monday on Wall Street on concerns that the Federal Reserve’s stimulus may be drawing to a close and a cash squeeze in China could further slow growth.

At the close, the Dow Jones industrial average was off 139.84, or 0.9 percent, to 14,659.56. The broader Standard & Poor’s 500-stock index was down 1.2 percent, and the Nasdaq composite fell 1.1 percent.

Earlier in the session, the Dow was down more than 200 points.

European and Asian shares also slumped.

Banking shares in China tumbled to their biggest daily loss in almost four years after the People’s Bank of China, the country’s central bank, said lenders needed to do a better job of managing their cash and loans. The central bank is trying to move China, the world’s second largest economy, away from credit-driven investment.

The S.&P. 500 has fallen 3.5 percent in June, and is on track for its worst monthly performance since May 2012.

“We are starting to see that follow through in Asia, which is all part of the broader narrative — the focus on a lack of stimulus, a creeping higher in rates and the potential impact for less liquidity globally,” said Peter Kenny, chief market strategist at Knight Capital in Jersey City. “This underscores the power and the importance of Fed policy to global central banking.”

The shift out of assets that have benefited most from cheap money has been sharpest in the United States debt market, where yields on 10-year Treasury notes hit 2.6 percent on Monday, its highest level since August 2011.

This rise in rates and the brighter outlook for the American economy, which was behind the Fed’s decision, has favored the dollar against most major currencies. The dollar index was up 0.3 percent at 82.57 points on Monday, building on last week’s 2.2 percent rally, its biggest weekly gain in 19 months.

Against the yen, the dollar was down 0.1 percent to 97.80 yen, while euro fell 0.2 percent to $1.3099, a level not seen since June 6.

Tenet Healthcare, a hospital operator, said it would buy smaller rival Vanguard Health Systems for $4.3 billion, or $21 per share including debt, to expand into new geographies. Vanguard shares jumped 67 percent and Tenet gained 4.5 percent.

Rising interest rates served to dent gold prices, weighing on mining stocks, while other commodities were also pressured by strength in the dollar.

Freeport McMoRan Copper and Gold has restarted some operations at the world’s second-biggest copper mine after receiving approval from the Indonesian government. Freeport shares shed 4.8 percent.

European equity markets remained weak despite data showing German business morale picking up for a second straight month in June, pointing to a slow recovery for Europe’s largest economy. The Euro Stoxx 50 of euro zone blue chips closed down 1.5 percent, and the FTSE 100 in London lost 1.4 percent.

Op-Ed Contributor: At Long Last, Stocks Get a Jolt

Many interpreted his remarks — which followed a two-day meeting of the Fed’s policy-making committee and which noted, among other things, that the Fed expected the unemployment rate to decline to around 7 percent next summer, from its current perch of 7.6 percent — as signaling the beginning of the end for the controversial program known as quantitative easing, or Q.E., now in its third round. That program, in which the Fed has purchased tens of billions of dollars of Treasury and mortgage-backed securities a month, has kept interest rates at rock bottom since 2008, and helped propel stock and bond prices to their recent heights.

But since Mr. Bernanke’s remarks, the dominant market sentiment hasn’t been euphoria, but fear.

What happened to change the mood so dramatically, so quickly? Is the panic selling justified — or is it just the first glimmer of hope that the Fed will finally take the metaphorical morphine drip out of the arm of the capital markets and allow the forces of supply and demand to set long-term interest rates?

Before answering those questions, it might be useful to review what exactly Mr. Bernanke said. First, he said that there should be no immediate change to the stimulus program. He said the economy looked as if it was slowly improving, that Fed officials saw signs that employment was picking up and that the inflation rate was hovering below the Fed’s target of 2 percent.

Good news, right? He said that if these encouraging economic trends continued, then it might be appropriate to begin easing up a bit on the Fed’s $85 billion monthly bond purchases. He said that nothing was set in stone and that all depended on what the economic data revealed in the months to come. He made the analogy to driving a car. “Any slowing in the pace of purchases will be akin to letting up a bit on the gas pedal as the car picks up speed, not to beginning to apply the brakes,” he said.

But the fact that the bond and stock markets panicked in the wake of these relatively innocuous statements is a testament to how off-kilter things have gotten: the market has become addicted to the Fed’s artificial stimulus and the mere thought of its ending has brought on the ugly symptoms of withdrawal.

To Mr. Bernanke’s credit, the idea behind quantitative easing is intellectually creative, especially when the sole rate that the Fed can unilaterally control — the short-term federal funds rate — is already, at 0.25 percent, about as low as it can go. With such an extraordinary level of demand injected into the bond markets (which has driven prices higher), long-term yields, which move in the opposite direction of prices, have fallen to preposterously low levels.

Mr. Bernanke’s bet remains that these low interest rates will spur increases in home buying, corporate borrowing and consumer spending, which in turn will increase the overall demand for goods and services and lead businesses to hire more workers.

But so far, the biggest beneficiaries of quantitative easing haven’t been workers and consumers, but rather the Wall Street banks that have taken the cheap money that Mr. Bernanke insists on giving them and have gorged on the very Treasury and mortgage securities that the Fed has agreed to buy at artificially inflated market prices.

It has been a virtuous, and profitable, circle for the big banks that thrive on this kind of easy arbitrage. For the millions of Americans who live on fixed incomes, though, quantitative easing has been a disaster. Savings go unrewarded, and in order to get any meaningful return, investors have had little choice but to overpay for risky debt securities — or head to the stock market, which until recently had also been inflating like a balloon.

The good news is that, finally, the artificial high might just be coming to an end. No addiction is healthy and this one is no exception. Weaning ourselves off the Fed’s cheap money will hurt. Between the sudden collapse of bond prices and the sharp drop in the stock market, investors are now feeling some pain. Good. A healthy economy demands that the price of borrowed money be set by the market to correspond with risk, not be distorted by a half-decade’s worth of interventions from a central bank.

As we saw throughout much of 2007 and 2008, when markets badly misprice risk it can have disastrous consequences for economies throughout the world. The sooner we get clean, the better.

William D. Cohan, a former Wall Street banker, is the author of the forthcoming book “The Price of Silence: The Duke Lacrosse Scandal, Wall Street and the Power of the Elite.”

Fundamentally: When Interest Rates Rise, Stocks Needn’t Fall

Here’s the reality: In May, rates actually rose quite sharply, as 10-year Treasury yields jumped to 2.16 percent from 1.63 percent. Yet the Dow Jones industrial average still soared more than 400 points, to end the month at 15,115.57.

The stock market’s road did become choppy as rates rose. The Dow lost more than 200 points on Friday, for example, but the overall trend remained upward. It just goes to show that while there is a connection between interest rates and the stock market, it isn’t a simple one. When rates rise, said Jeffrey N. Kleintop, chief market strategist at LPL Financial, “it is not the size of the move itself, but the absolute level of yields reached that matters to the stock market.”

Even with the recent uptick, the 10-year yields are only about half of what they were five years ago, during the global recession. And a climb in rates from such a low level may be a tail wind — not a headwind — for stocks, Mr. Kleintop said.

For starters, he said, “it reflects an improving outlook for economic growth and less risk of deflation.” Both are welcome developments to equity investors. Moreover, “it results in losses for bonds,” he said, which may prompt investors to sell those bonds and move money into stocks.

Indeed, over the past month, the average bond fund that invests in long-term government debt has lost more than 6.5 percent of its value, according to Morningstar, the investment research firm. The typical blue-chip stock fund, meanwhile, has gained about 4 percent.

But this is not to say that rising interest rates wouldn’t hurt the stock market at all.

For instance, if rates were to climb enough to threaten the rebound in housing, stocks might start to sing a different tune, market strategists say. But the average 30-year fixed-rate mortgage is still at a historically low 3.81 percent, even though that rate is up since the end of April.

Similarly, climbing rates would threaten stocks if they signaled rising inflation, so that the Federal Reserve might have to curtail its efforts to stimulate the economy. But the most recent reading of the Consumer Price Index showed that prices were up only around 1.1 percent over the past 12 months. That’s down from the 1.6 percent pace of inflation at the start of the year.

So how much would rates have to climb before investors became seriously worried about stocks?

If history is any guide, the threshold is around 6 percent.

Doug Ramsey, chief investment officer at the Leuthold Group, has looked at stock valuations and bond yields going back to 1878. He has found that while there is a relationship between the two, big trouble for the stock market appears to kick in only when 10-year Treasuries are yielding 6 percent or higher.

Theories abound as to why 6 percent seems the magic number. James W. Paulsen, chief investment strategist at Wells Capital Management, argues that 6 percent is important because it reflects the overall economy’s nominal long-term growth rate. “I can see why you’d get a negative reaction if the cost of capital for the market was above the inherent, sustainable growth rate of the economy,” he said.

Mr. Ramsey offers a slightly different explanation. He said that for rising bond yields to hurt the stock market, they would have to be viewed by investors as real competition to stocks. Perhaps at 6 percent, he said, bond yields are high enough that “they are truly thought of as potential replacements or substitutes for long-term stock returns.”

TO be sure, some market watchers say what really matters isn’t the current move in long-term market rates, but what happens with the short-term rate that the Fed controls.

Recently, Ben S. Bernanke, the Fed chairman, hinted that the central bank might soon begin to taper its purchases of Treasury bonds as part of its efforts to stimulate the economy. He did not offer any clues, however, as to when the federal funds rate, now 0.25 percent, might be lifted.

John Stoltzfus, chief market strategist at Oppenheimer & Company, noted that whenever the Fed does raise short-term rates, “it could create a jostle in the stock market.” But Mr. Stoltzfus warned investors not to assume that Fed increases would immediately pull the plug on the bull market.

He notes that the last time the Fed started raising rates was in June 2004, when the funds rate was at 1 percent. The central bank proceeded to lift rates 17 times through the end of June 2006. During that stretch, the Standard & Poor’s 500-stock index rose 11.3 percent, while the Russell 2000 index of small-company stocks gained 22.5 percent. In the 12 months that followed — while the Fed held rates steady — stocks continued to post double-digit gains.

“What really counts here for investors is, are rising rates crimping the affordability of credit?” Mr. Stoltzfus said. With two-year Treasury notes yielding just 0.29 percent, he said, “I’d argue that we’re far from that point.”

Paul J. Lim is a senior editor at Money magazine. E-mail: fund@nytimes.com.

Homes See Biggest Price Gain in Years, Propelling Stocks

All 20 cities tracked by the Standard & Poor’s Case-Shiller home price index posted year-over-year gains, as they have done for three consecutive months now. The 20-city composite index rose 10.9 percent over the last year. That is the biggest annual increase since April 2006. Several cities – Charlotte, N.C.; Los Angeles; Portland, Ore.; Seattle; and Tampa, Fla. – had their largest month-over-month gains in more than seven years.

Continued strength in the housing market is welcome news for the rest of the economy, particularly given federal government spending cuts that went into effect in March and the end of the payroll tax holiday in January. With home values rising, the construction industry has been more motivated to ramp up building and hire back workers. Consumers are also feeling wealthier and so are more willing to spend money.

“We’ve been sort of pleasantly surprised by the resilience of consumption at the beginning of the year,” said Daniel Silver, an economist at JPMorgan Chase. “Spending has been doing quite well, at least for this expansion, over the first half of the year, due in part to these wealth effects.”

The positive impact of rising home values and the appreciating stock market is expected to offset “at least a third of the fiscal tightening,” said Ian Shepherdson, chief economist at Pantheon Macroeconomic Advisors.

Consumer sentiment has already been improving. On Tuesday, the Conference Board reported that its Consumer Confidence Index rose in May to its highest level since February 2008. Consumers’ assessments about both current conditions and their expectations for the future improved substantially, after having plunged in January after gridlock in Washington over fiscal issues.

“Five years after the start of the financial crisis in earnest, and four years and a week’s time from the beginning of the economic recovery, we’re finally starting to get more of a pickup, more of a reduction in caution in terms of consumers’ behaviors,” said John Ryding, chief economist at RDQ Economics. “It’s been a very drawn-out process, but you have to remember what we’ve been digging our way out of, and after all it’s a far less drawn-out process than what’s been taking place in Europe.”

The strong housing and consumer confidence numbers bolstered the markets, with both the Standard & Poor’s 500-stock index and the Dow Jones industrial average up nearly 1 percent in early afternoon trading.

The double-digit housing price increase is being driven by a confluence of factors.

One, the economy over all has been recovering, so people are finally willing to start buying again. At the same time, the inventory of homes available on the market remains unusually low, thanks to little new building in the last few years and the large number of underwater homeowners who are unwilling or unable to sell..

The limited supply, coupled with growing demand, has pushed prices higher. Of course, higher prices could encourage some homeowners to come off of the sidelines and finally place their homes on the market.

“You’ve had this dynamic that has been favorable for price increases now, but it’s also favorable for supply to come back on market, so that will mean some moderation in the pace of price increases,” said Mr. Silver, who said that he expected home prices to continue growing but not necessarily at the double-digit rate seen in May.

Additionally, there are fewer distressed sales – that is, foreclosures and short sales. As a result, the composition of home sales includes fewer sales at depressed prices to bring down the overall numbers.

Finally, home prices in many areas experienced severe, unsustainable plunges during the recession. Now, prices are returning to healthier levels, and coming off a very low base, so the price appreciation looks sizable.

“Some of the areas with the largest declines in house prices during the crisis have shown the strongest increases in prices more recently,” said Mr. Silver.

In Phoenix, for example, home values have risen 22.5 percent from a year earlier, and Las Vegas likewise posted a 20.6 percent gain.

Economists generally expect home prices to continue rising, particularly as the economy improves and more young people move out of their parents’ homes. And many dismiss concerns of a potential bubble, because housing prices remain well below their highs. Even after 10 straight months of year-over-year gain, the 20-city composite price index is 28 percent below its previous peak in July 2006.

“Talk of a house price bubble seems premature,” said Ed Stansfield, an economist at Capital Economics. “In relation to incomes, rents or their own past, U.S. home prices still look low.”

Victoria Shannon contributed reporting.

Stocks Gain on Friday After Volatile Week

Stocks advanced modestly on Friday, leaving the Standard & Poor’s 500-stock index with slight gains after a volatile week, as strong economic data overshadowed growth concerns in China and Europe and let investors discount the impact of federal spending cuts.

Data reported early in the day showed that Asian factories were slowing and European output was falling, setting off a sharp drop at the beginning of trading in New York. But most of the losses evaporated after a report showed that United States manufacturing activity had expanded in February at the fastest pace in 20 months. Consumer sentiment also rose in February as Americans turned more optimistic about the job market.

As $85 billion in government budget cuts took effect on Friday, President Obama blamed Republicans for the lack of a compromise to avert the so-called sequester. But the stock market appeared to have already priced in legislators’ failure to reach an agreement.

“We were able to dig out of that hole, but not make any great strides on it either,” said Peter M. Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Ill. “We will probably be in a holding pattern pending some big development on a broader budget deal.”

The Dow Jones industrial average gained 35.17 points, or 0.25 percent, to 14,089.66. The S.& P. 500 rose 3.52 points, or 0.23 percent, to 1,518.20. The Nasdaq composite index advanced 9.55 points, or 0.3 percent, to 3,169.74.

For the week, the Dow rose 0.64 percent, the S.& P. 500 edged up 0.17 percent and the Nasdaq gained 0.25 percent.

It was a bumpy road to the week’s slight gains. The markets slid on Monday after inconclusive elections in Italy revived concerns about the euro zone, only to rebound in the next two sessions after the Federal Reserve chairman, Ben S. Bernanke, defended the central bank’s stimulus measures.

The low interest rates from the Federal Reserve’s monetary policy have helped equities continue to attract investors. The Dow is less than 1 percent away from its nominal intraday record of 14,198.10. Declines have been shallow and short-lived, with investors jumping in to buy when the market dips.

Advancing stocks outnumbered declining ones on the New York Stock Exchange by a ratio of about 17 to 13, while on the Nasdaq, about seven stocks rose for every five that fell.

Shares of Intuitive Surgical jumped 8.5 percent on Friday, to $553.40, after a Cantor Fitzgerald analyst, Jeremy Feffer, upgraded the stock, saying a slide of more than 11 percent on Thursday had been a gross overreaction to a news report.

Groupon shares surged 12.6 percent, to $5.10, a day after the company fired its chief executive in response to weak quarterly results.

Gap stock rose 2.9 percent, to $33.87, after the company reported fourth-quarter earnings that beat analysts’ expectations and raised its dividend by 20 percent.

Salesforce.com posted sales that beat forecasts, driving its stock up 7.6 percent, to $182.

Chesapeake Energy shares fell 2.4 percent, to $19.67, after the Securities and Exchange Commission escalated its investigation of the company and its chief executive, Aubrey McClendon, over a perk that granted him a share in each of the natural gas producer’s wells.

The benchmark 10-year Treasury note rose 10/32, to 101 13/32, and its yield fell to 1.85 percent from 1.88 percent late on Thursday.

Stocks Shed More Than 1 Percent

Stocks declined more than 1 percent on Wall Street late on Monday on fears that a divided parliament in Italy would get in the way of the country’s reforms and hamper the euro zone’s stability.

The Standard & Poor’s 500-stock index went from a morning gain to a 1.8 percent loss by the end of trading. The Dow Jones industrial average lost 1.6 percent, or more than 216 points, and the Nasdaq composite index was down 1.4 percent.

Conflicting forecasts of the outcome of Italy’s election raised the possibility of deadlock in parliament, which could in turn paralyze a new government and reignite the euro zone crisis.

In trading on Wall Street, Barnes & Noble stock jumped 12.6 percent after its chairman, Leonard Riggio, said he was considering a bid for the company’s bookstore business.

Stocks have been strong performers so far this year, with the S.&P. 500 up 6.2 percent to around its highest levels since 2007. That has prompted many to predict a pullback, but so far declines have been neutralized as investors use any dip as a buying opportunity. While the S.&P. fell last week, the decline was a slight 0.3 percent and was the first weekly drop after a seven-week string of gains.

“People are cautious about investing near five-year highs, especially given the pace at which we got here, but there’s still room to grow and any pullback should be shallow,” said Robert Pavlik, chief market strategist at Banyan Partners in New York.

The gains have come on strong corporate earnings. With 83 percent of the S.&P. 500 companies having reported results, 69 percent beat profit expectations, compared with a 62 percent average since 1994 and 65 percent over the last four quarters, according to Thomson Reuters data.

Another test for equities will come with the looming debate over big United States budget cuts that will take effect on Friday if lawmakers fail to reach an agreement over spending and taxes. The White House issued warnings about the harm the cuts are likely to inflict on the economy if enacted.

More government-related uncertainty came from Italy, where a close election left questions about how the country would handle its three-year debt crisis. Still, European shares were higher on Monday, rising about 0.5 percent.

Lowe’s Companies reported earnings that beat expectations, helped by rebuilding efforts after Hurricane Sandy in the United States. Shares were off 2.3 percent.

Dynavax Technologies shares plunged 35 percent after the Food and Drug Administration denied approval for the company’s adult hepatitis B vaccine and sought additional data to evaluate its safety.

Stocks Stir After Holiday

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DealBook: Stocks Little Changed as Market Reopens

Robert Caplin for The New York TimesMayor Michael R. Bloomberg of New York City on the floor of the New York Stock Exchange on Wednesday.

4:34 p.m. | Updated

The major stock indexes ended little changed in light trading on Wednesday as the market reopened after a two-day shutdown caused by Hurricane Sandy.

A bevy of TV news crews and camera-toting tourists thronged the New York Stock Exchange for the opening, but the trading floor betrayed little that was unusual.

A small crowd enveloped Mayor Michael R. Bloomberg of New York City as he briefly stepped onto the floor to greet exchange workers. He later took to the balcony overlooking the pits to ring the opening bell, flanked by Duncan L. Niederauer, the chief executive of NYSE Euronext, and Robert Steel, a deputy mayor.

As the familiar clang rang through the hall for the first time this week, a small cheer erupted from the floor.

The dozen staffers at “the ramp,” an important N.Y.S.E. nerve center on the floor, scanned a wall of monitors to check on market activity.

Lucas Jackson/ReutersDuncan Niederauer, chief executive of NYSE Euronext.

Milling about the floor was Lawrence E. Leibowitz, NYSE Euronext’s chief operating officer, checking on the state of operations. It was his second straight day at the exchange, having slept there overnight after wading from his home to Wall Street.

“There have been very few, very isolated problems,” Mr. Leibowitz said. He pointed to blank monitors that were shut off because the data provider was delivering incorrect market data.

“If that’s the worst of our problems,’ he added, “we’re in good shape.”

Mr. Niederauer seemed pleased as well. Wednesday was his first day back at the exchange since last week, having worked remotely because he could not come into the city.

“We’re pleased to see the turnout of staff,” he said, with many market makers being nearly fully represented.

He said many technical issues had been resolved, though technicians from Verizon were on hand to patch spotty communications and network connections. Many trading firms resorted to sharing working Internet and phone lines, while specialists ducked outside to get cellphone service unavailable on the floor.

The Dow Jones industrial average ended the day down 10.75 points, or 0.08 percent, at 13,096.46. The Nasdaq composite index closed down 10.72 points, or 0.36 percent, at 2,977.23. The Standard & Poor’s 500-stock index, meanwhile, ended fractionally higher.

Jonathan D. Corpina, a senior managing partner at Meridian Equity Partners, came armed with a flashlight to navigate the darkened streets of Lower Manhattan. But he found it easy to find the exchange, which was illuminated thanks to backup generators.

“We’re here filling orders, and it’s business as usual,” he said.

Traders were treated to a free breakfast on the floor of the Big Board and a free lunch in the cafeteria. The N.Y.S.E. also dispatched 20 cars Tuesday to ensure everyone who needed to get in could get in.

Some traders did improvise in the wake of the disaster. Many stood outside the exchange’s doors Wednesday because they were having trouble getting cellphone service on the floor.

At least one firm, however, had operations affected by the storm. The Knight Capital Group suffered a power disruption at its headquarters in Jersey City on Wednesday and told clients to route their orders elsewhere, a spokeswoman for the trading firm confirmed.

It is the first time that the trading firm has run into significant problems since it was rescued by a group of investors in August.

Susanne Craig contributed reporting.

Stocks Lose Their Spark

Stocks on Wall Street rose Monday at the start of a new quarter after data showed strength in the American manufacturing sector, but a broad rally lost some fizzle late in the day.

The Standard & Poor’s 500-stock index was up 0.3 percent by the close, and the Dow Jones industrial average was ahead 0.6 percent. But declines in technology stocks helped pull the Nasdaq composite index down 0.1 percent.

The indexes trimmed their gains somewhat after Ben S. Bernanke, chairman of the Federal Reserve, in a speech in Indianapolis, delivered a broad defense of the Fed’s bond-buying stimulus plan, saying it was necessary to support a flagging economic recovery.

Mr. Bernanke pushed back against accusations that the Fed’s policy is laying the groundwork for inflation, enabling the government to run large budget deficits, undercutting the dollar and hurting savers.

Earlier, the Institute for Supply Management said its index of national factory activity rose to 51.5 from 49.6 in August, topping expectations for 49.7, according to a Reuters poll.

It was the first time since May that the index has been above the 50 threshold that indicates expansion in the sector.

The Markit Manufacturing index, however, fell to 51.1 points in September from 51.5 in August, and averaged 51.4 in the third quarter. Both the monthly and quarterly readings were the lowest in three years. Still, a reading above 50 indicates expansion.

Euro zone manufacturing put in its worst performance in the three months to September while Asia’s manufacturers are continuing to struggle in the face of tepid demand from the United States and Europe, flagging a return to recession for the euro zone and a seventh straight quarter of slowing growth in China, business surveys showed.

But European markets gained, with stock indexes up more than 1 percent. The DAX in Frankfurt finished 1.5 percent and the CAC 40 in Paris added 2.4 percent. The FTSE 100 in London rose 1.4 percent.

Equity markets were being supported by expectations of support from central banks, including the Federal Reserve and the European Central Bank, which are offsetting weak data, according to Rick Meckler, president of investment firm LibertyView Capital Management in New York.

“The market focuses more on future results than on what’s happening today,” he said.

Wall Street finished lower on Friday but recorded its best third quarter since 2010 after a series of central bank actions sparked a bullish reversal in equity markets, but signs of weakness in the economy drove stocks lower for the week.

Strategies: Central Banks’ Moves Are Giving Global Stocks a Lift

The overall economy is sluggish at best, and unemployment has remained above 8 percent since early 2009. Yet despite a decline last week, stock investors have been on a roll. In the three months ended on Friday, the Standard & Poor’s 500-stock index rose 5.8 percent. In Europe, stocks fared even better for the quarter, with the Euro Stoxx 50 index up 8.4 percent. Japan was a laggard, as the Nikkei index dropped 1.5 percent, but in Hong Kong the Hang Seng index rose 7.2 percent.

During much of this period, the Federal Reserve and other central banks have been flooding the planet with money. Cause and effect is hard to prove, but it seems reasonable to assume that the central banks have had something to do with the markets’ buoyancy. “Clearly central bank actions have been a major factor in the market rally,” Ethan Harris, chief North American economist at Bank of America Merrill Lynch, wrote in a recent report. News reports of “super dovish” announcements by the Fed and the European Central Bank correlated neatly with stock market climbs, he found.

On Sept. 6, for example, Mario Draghi, president of the European Central Bank, said that under certain conditions it would buy unlimited amounts of government bonds, a move that could lower borrowing costs for Spain and other troubled countries in the euro zone. Stocks immediately rose around the world.

The next week, the Fed met the market’s expectations, and then some. It extended its plans for maintaining near-zero short-term interest rates into the middle of 2015. And it announced that it would increase its bond-buying to a total of $85 billion a month for the rest of the year, with a focus on mortgage-backed securities, a program aimed at giving the housing market another lift. What’s more, the Fed linked the duration of its loose policies to the state of the job market. As long as the unemployment rate remained unacceptably high, the Fed planned to maintain its expansionary monetary policy, Ben S. Bernanke, the Fed chairman, said in a news conference.

“We will be looking for the sort of broad-based growth in jobs and economic activity that generally signal sustained improvement in labor market conditions and declining unemployment,” Mr. Bernanke said.

Last week, however, the markets gave up ground. The central banks aside, it’s easy to see why the bullish mood might darken quickly. A partial list of dangers includes rising tensions in the Mideast, a contentious election campaign and a looming “fiscal cliff” in the United States, an unresolved and multifaceted financial crisis in Europe, and a global economy that is far from robust.

Little of this would appear to augur well for stocks, except that the central banks have tilted the odds on the bullish side, at least for now, some analysts say.

“A modestly growing economy with the cyclically sensitive sectors at still-depressed levels is a relatively stable and safe, if not exciting, environment,” said Larry Kantor, head of research at Barclays, in a recent report. “When this is combined with a central bank committed to aggressively supporting growth through higher asset prices, it amounts to a very attractive environment for taking risk.”

In fact, Barclays calls the current version of its flagship quarterly research publication “Global Outlook: Don’t Fight the Fed.”

OF course, no one knows where the markets are going day to day. After their recent run upward, and even without the emergence of any nasty news, stocks could easily “consolidate,” that is, decline for a while before moving upward again. And because the global economy is already rather weak, an external shock — a disruptive geopolitical event — could alter perceptions abruptly.

Some analysts are not upbeat even now. The Economic Cycle Research Institute, an independent forecasting organization with an excellent record, says it believes that the United States is already in recession, and that action by the Fed won’t change that. “Unfortunately, the economy is just going to have to ride out the business cycle,” Lakshman Achuthan, chief operations officer of the institute, said recently. “The Fed’s actions have been increasingly ineffective.” The relationship between the economy and the stock market is complex, he said, and it’s not always clear whether the market is predicting the direction of the economy, reacting to it or responding to other factors.

Robert Rodriguez, managing partner and chief executive of FPA, an asset management firm in Los Angeles, says it’s possible that fund managers, seeking to bolster their returns, will “continue to pile into stocks in the remainder of this year and push them to even higher levels.” But he says he believes that the market is already overextended, and his firm has begun to reduce its stock exposure.

Mr. Rodriguez anticipated the subprime mortgage crisis and the financial crisis. But, as he acknowledged ruefully in an interview, he “was early, and got out of the market too soon, and could well be doing so again.” Still, he says he fears what he calls “the unintended consequences of the expansionary activities of the central banks.”

Another credit bubble is likely if the banks persist in trying to prop up the global economy, he said. As he sees it, the fundamental problem in the United States can’t be solved by the Fed. “We must get our fiscal house in order,” he said, “and we have only a limited amount of time to do it.”

For the next several months, though, he suspects that Wall Street’s fascination with the Fed may well keep stocks rising.