Stocks jumped Wednesday, led by a sharp rebound in the energy sector following its recent struggles related to the Gulf of Mexico oil spill.
The Dow Jones Industrial Average jumped 225.52 points, or 2.2 percent to 10,249.54, helped by gains of more than 2 percent each in Exxon Mobil and Chevron. The average’s strongest performers in percentage terms were American Express, up 4.5 percent, and Walt Disney, up 4.2 percent after the head of its consumer-products business issued a strong long-term forecast for the company’s retail sales.
All three major indexes have more than recovered their steep losses from Tuesday’s session, which marked investors’ first opportunity to respond to the failure of BP’s “top kill” operation to plug the Gulf spill. A sub-index tracking the Standard & Poor’s energy sector leaped 4.3 percent to 395.72, within a point of its close last week.
The news regarding the oil spill hasn’t improved much on Wednesday, with renewed efforts to use a robot to install a containment device also hitting complications. But traders said there was enough positive news elsewhere, including strong economic data and a few favorable corporate announcements like Disney’s, for them to look past the spill for now.
Traders and analysts said strong economic data also helped to attract buyers to the broader market on Wednesday. New reports showed an increase in U.S. pending home sales in April, surpassing expectations as buyers signed contracts to collect a government tax credit.
Some participants grew more confident of the U.S. recovery on Wednesday, with many already looking ahead to monthly payrolls data due out from the government on Friday morning.
“Once those numbers are out, you’ll see if this rally is for real,” said Darren Chervitz, research director at Jacob Asset Management. “Otherwise, we’ve had such a flurry of bad news lately—the oil spill, Europe, the Israeli flotilla—the market was sort of bound to rally once there was a lull. Today we’re getting that sort of break, and the market is responding. “
Safe-haven assets—U.S. Treasurys and gold—were lower. The yield on the 10-year U.S. Treasury note edged up to 3.346 percent.
The U.S. dollar weakened against the euro, which crept up to $1.2240.