New York: US stocks rose on Wednesday as investors grabbed shares beaten down in the previous session’s sell-off and data showed pending home sales rose more than expected.
The major indexes advanced more than 1%, reversing Tuesday’s slide in which energy shares had tumbled. Stocks have struggled to build upward momentum since reaching a 19-month high on 23 April, with the S&P 500 climbing from recent support at 1,060.
Data showed pending sales of previously owned homes increased to a six-month high in April, though analysts pointed to a rush to take advantage of the home buyer’s tax credit before it expired.
Investors seized on the housing data as a reason to get back into the market.
“The fact that the market is reacting to a data point that some people feel deserves a pretty big footnote is indicative of a market that does seem to be skewed to the oversold side,” said Craig Peckham, equity trading strategist at Jefferies & Company in New York.
The Dow Jones industrial average rose 107.62 points, or 1.07%, to 10,131.64. The Standard & Poor’s 500 Index gained 14.27 points, or 1.33%, to 1,084.98. The Nasdaq Composite Index climbed 32.03 points, or 1.44%, to 2,254.36.
In company news, Ford Motor Co said its US sales rose in May for all brands from a year earlier and announced an increase in its second-quarter North American production plan, sending its stock up 2.5% at $11.70.
The Dow Jones US Home Construction index rose 2% and KB Home gained 2.3% to $14.04.
Energy shares were among the best performing stocks, recovering from Tuesday’s losses while BP Plc embarked on its latest effort to halt the oil spill in the Gulf of Mexico. Even so, the plan hit a snag as BP attempted to cut away what is left of the well’s riser pipe.
US-listed shares of BP climbed 1.9% to $37.21 but since the rig explosion on 20 April, the shares have lost more than 38%.
The PHLX Oil Service Sector index climbed 4% as Halliburton Co jumped 11.5% to $23.57 and Schlumberger Ltd advanced 7.9% to $55.85.
While there’s still investor caution over the outlook for the stocks, “the genuine blood bath in the sector yesterday certainly seems to have drawn in some fundamental value seekers,” said Peckham.
Also giving the energy sector a lift was a 1.3% gain in oil prices to $73.55 a barrel. The S&P energy index rose 2.8%.
Amgen Inc helped boost the Nasdaq, gaining 8.4% to $55.03 after the US Food and Drug Administration approved its osteoporosis drug.