US and European stocks rise sharply, oil prices fall
NEW YORK (Reuters) – The Dow and S&P 500 rose more than 1% in midday trading on Wednesday, extending their rebound from the previous session, while oil prices fell sharply after US data fanned fears of oversupply.
European shares also jumped, and equities’ trading was less choppy than in Tuesday’s session.
The Cboe Volatility Index, known as the VIX, the most widely followed barometer of expected near-term volatility for the S&P 500 index, eased after rising sharply earlier in the week.
On Tuesday, US equities had roared back from Monday’s sell-off, when the Dow and S&P 500 saw their biggest oneday declines in two years.
“Now that the volatility event is over, investors will focus on the economic data and the fundamentals,” said Sameer Samana, a global-equity and technical strategist at Wells Fargo Investment Institute in St. Louis.
But he said equities could see more declines before investors’ confidence is rebuilt.
The Dow Jones Industrial Average rose 378.68 points, or 1.52%, to 25,291.45, the S&P 500 gained 32.48 points, or 1.21%, to 2,727.62, and the Nasdaq Composite added 54.36 points, or 0.76%, to 7,170.24.
The pan-European FTSEurofirst 300 index rose 2.31%, and MSCI’s gauge of stocks across the globe gained 1.06%.
Emerging-market stocks rose 0.18%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.15% lower, while Japan’s Nikkei rose 0.16%.
In the energy market, oil prices fell. US crude fell 2.08% to $62.07 per barrel, and Brent was last at $66.12, down 1.11% on the day. US data showed an unexpected buildup in refined products, fanning fears of oversupply heading into the slow-demand season.
EASING VOLATILITY
It was a steep spike in yields last Friday that sparked the initial Wall Street rout, forcing sales by a host of highly leveraged funds, which ramped up volatility and drove yet more selling.
Investors are also wary about US lawmakers wrangling to extend the so-called debt ceiling; funding for the US government runs out on February 8 unless a stopgap bill managed to pass the Senate later on Wednesday.
Like many others, BlackRock analysts described the rout as a buying opportunity, seeing the leveraged-products moves as essentially driven by jitters over recent equity gains on one hand and the possibility of higher interest rates on the other.
Strategists also point out that the improving global economic outlook is a positive for stocks overall.
US Treasury prices fell before the Treasury Department was due to auction new 10-year notes.
Benchmark 10-year notes last fell 9/32 in price to yield 2.7999%, from 2.766% late on Tuesday.
The US dollar rose against most major currencies amid the gains on Wall Street.
The dollar index rose 0.61%, with the euro down 0.68% to $1.2292.