Wall Street soars on drop in oil
Dow Jones average rises 276 points
NEW YORK — Wall Street at least temporarily shrugged off some of its many concerns Wednesday and bounded higher thanks to a drop in oil prices. The Dow Jones industrial average rose 276 points, or 2.5 percent, posting its best daily gain in three months.
The broader Standard & Poor’s 500 index also gained 2.5 percent, while the technology-dominated Nasdaq composite index surged 3.1 percent. Investors exited government bonds and back into stocks as it appeared that the slowing economy will curtail demand for fuel and, in turn, energy costs.
Light, sweet crude fell $4.14 to settle at $134.60 a barrel on the New York Mercantile Exchange, bringing its two-day decline to $10.58.
In addition to sinking oil prices, investors found relief in a decision by Wells Fargo & Co. to boost its dividend that helped counter some of the market’s concerns about the health of banks. The San Francisco-based bank’s move to raise its payout, along with its tamer-than-expected profit decline, was seen as a bullish sign for the troubled sector.
Still, the Labor Department’s report that consumer prices shot up in June at the second fastest pace in 26 years reminded investors that inflation still poses a threat to economic growth.
The Dow rose 276.74, or 2.52 percent, to 11,239.28. It was the blue-chips’ biggest one-day gain since April 1, when the index rose 391 points.
Broader stock indicators also rose Wednesday after fluctuating in the early going. The S&P 500 index advanced 30.45, or 2.51 percent, to 1,245.36, and the Nasdaq rose 69.14, or 3.12 percent, to 2,284.85.
Advancing issues narrowly outpaced decliners by more than 3 to 1 on the New York Stock Exchange, where consolidated volume came to 6.58 billion shares, down from 7.26 billion on Tuesday.
While Wednesday’s advance likely indicates some enthusiasm among investors, it could also reflect simple bargain hunting rather than a great change in conviction. With many quarterly reports due in the coming weeks, many investors remain uncertain about the health of the economy.
Bond prices declined. The yield on the benchmark 10-year Treasury note, which moves opposite its price, jumped to 3.94 percent from 3.82 percent late Tuesday.
The dollar was mixed against other major currencies, while gold prices fell.
Oil prices declined after Energy Department figures showed that domestic inventories of crude oil and gasoline rose last week, rather than declining as analysts had expected.
The Labor Department’s report that its Consumer Price Index rose 1.1 percent in June came after economists had expected a gain of 0.8 percent. Two-thirds of the increase is linked to surging energy prices. The core reading, which excludes often volatile food and energy costs, ticked up 0.3 percent.
Beyond the inflation reading, which follows a report Tuesday that showed a 1.8 percent increase in wholesale prices for June, investors examined a Fed report that industrial production rose 0.5 percent in June after declining 0.2 percent in May. The increase was the highest since a 0.6 percent gain in July of last year.
It was a huge day for sectors such as financials and airlines that have seen massive sell-offs recently.
Wells Fargo & Co. said its second-quarter earnings fell 22 percent as more customers at the nation’s fifth-largest bank failed to repay loans. But the company’s results beat Wall Street expectations, and investors were pleased by Wells Fargo’s decision to raise its quarterly dividend to 34 cents from 31 cents. Wells Fargo rose $6.72, or 32.8 percent, to $27.23.
Delta Air Lines rose $1.24, or 26.6 percent, to $5.91 after reporting that high fuel prices led to a hefty second-quarter loss despite a strong increase in sales. The results topped Wall Street estimates, however, which excluded one-time items.
The Russell 2000 index of smaller companies rose 24.40, or 3.68 percent, to 686.75.
Overseas, Japan’s Nikkei stock average rose 0.05 percent. Britain’s FTSE 100 fell 0.60 percent, Germany’s DAX index rose 1.21 percent, and France’s CAC-40 rose 1.26 percent.
