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Dow, S&P climb on energy and industrials; Nasdaq falls

By Chuck Mikolajczak

By Chuck Mikolajczak

NEW YORK (Reuters) - The Dow and S&P 500 advanced on Thursday to halt a two-session losing skid, buoyed by gains in industrial and energy shares as U.S. Treasury yields eased, while the Nasdaq lost ground for a third straight session.

Major indexes advanced early as worries about a faster pace of interest rate hikes by the U.S. Federal Reserve were eased by comments by St. Louis Fed President James Bullard, who expressed concerns that a "bunch of hikes" could turn Fed policy restrictive. Benchmark 10-year U.S. Treasury yields <US10YT=RR> retreated from the more than four-year highs hit on Wednesday.

Those gains faded, however, and major indexes finished well off session highs as investors exercised caution in what is likely to be a rising interest rate environment.

"The rally on Bullard was a little overzealous," said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.

"I wouldn’t be out there aggressively buying stocks because until the interest rate picture clarifies, and it probably will do so at a higher level, it is just going to create problems for equities," he said.

The concerns over rising interest rates have dogged Wall Street of late, and stocks stumbled on Wednesday after minutes from the Federal Reserve's January meeting showed the central bank's rate-setting committee grew more confident in the need to keep raising rates.

Market participants are still largely expecting the Fed to raise rates three times this year, beginning with its next meeting in March.

Despite the recent climb in rates, many analysts expect the stock market to be able to absorb the rise as long as economic data remain supportive and the pace of the increase is modest.

The Dow Jones Industrial Average <.DJI> rose 164.7 points, or 0.66 percent, to 24,962.48, the S&P 500 <.SPX> gained 2.63 points, or 0.10 percent, to 2,703.96, and the Nasdaq Composite <.IXIC> dropped 8.14 points, or 0.11 percent, to 7,210.09.

Benchmark 10-year notes <US10YT=RR> last rose 5/32 in price to yield 2.9225 percent, from 2.941 percent late on Wednesday.

Industrial shares climbed 0.59 percent, led by a 3.04 percent gain in Quanta Services Inc <PWR.N> after its quarterly results and a 3.34 percent rise in United Technologies Corp <UTX.N> after the aero parts maker said it is exploring a breakup of its business portfolio.

Energy stocks <.SPNY>, up 1.08 percent, also helped support gains, as oil prices advanced on a surprise draw in U.S. crude inventories.

Chesapeake Energy Corp <CHK.N> shares surged 21.67 percent, their biggest daily percentage gain since April 2016, after the company's quarterly results and outlook.

Advancing issues outnumbered declining ones on the NYSE by a 1.09-to-1 ratio; on Nasdaq, a 1.41-to-1 ratio favored decliners.

The S&P 500 posted two new 52-week highs and nine new lows; the Nasdaq Composite recorded 58 new highs and 47 new lows.

Volume on U.S. exchanges was 6.81 billion shares, compared to the 8.44 billion average for the full session over the last 20 trading days.

(Reporting by Chuck Mikolajczak; Editing by Cynthia Osterman and Leslie Adler)