For the past few days bond traders have been gripped with fear that the global markets will be raising interest rates and the Fed will have to follow to remain competitive. Massive selling erupted and Wall Street also put together a string of losses reflecting its concern about the negative effect higher interest rates would have on corporate bottom lines. Mild selling today seemed to reassure equity traders, and Treasury yields, which move in the opposite direction of prices, remained close to those of yesterday. This allowed mortgage rates to edge just a shade higher than those of Tuesday.

Fed officials continued to stir a pot of concerns. Chicago Fed president Michael Moskow, in a speech Tuesday evening, said that further tightening could be expected if signs of inflation remain present. But St. Louis Fed president William Poole, who said Monday that the Fed is watching for signs of inflation in the nation's strong economic growth, calmed concerns about a housing bubble, saying that he expects housing to remain strong.

There were no economic reports on tap for today, but the Energy Information Administration reported that crude oil inventories in the U.S. were substantially higher than forecasts. This, paired with OPEC's pledge to continue delivering 28 million barrels of oil per day, sent oil prices plunging. OPEC said its decision was based on its determination to keep oil prices affordable for the consumer and fill supply gaps such as those created by recent problems in Nigeria. Oil prices dipped below $60, but recovered some of their earlier losses, closing down $1.56 to $60.02 a barrel.

In a separate report, the Mortgage Bankers Association said that mortgage application volume held steady for the week ended March 3. Purchase applications eased 0.4 percent, while applications to refinance rose 2.6 percent, accounting for 38.5 percent of all applications. Applications for adjustable-rate mortgages edged down to 27.9 percent.

Stocks improve outlook

Stocks took heart from the steadiness in Treasuries and rallied in the last hour of trading. Money, however, gravitated toward staples, which do well even in a down economy. Dow Jones industrials Procter & Gamble, Coca-Cola and Altria each gained more than 1 percent, as did IBM. The only component to lose more than 1 percent was Alcoa, which has been racked by interest rate worries.

Google and the New York Stock Exchange Group Inc. made news. Google fell 2.9 percent after it was learned that the search engine giant had erroneously posted slides of expected first-quarter revenue growth and profit margins on its investor relations Web site during its recent analysts' day meeting. Google executives said the slides were not representative of current expectations. On the other hand, shares of the NYSE soared 24.5 percent during its second day of trading. The Exchange went public Tuesday after acquiring Archipelago Holdings Inc.

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