New York: US stocks rose on Wednesday as investors latched onto positive news out of Europe in the latest in a string of low-volume sessions suggesting little confidence in market direction.
Bank stocks recovered from Tuesday’s losses, with JPMorgan Chase and Co up 2.2% and the BKW bank index up 1.7%. A successful Portuguese debt offering as well as news that nationalized Irish lender Anglo Irish Bank would wind down assets pulled global equity markets higher.
After last week’s sharp bounce in equity markets halted the August sell-off, the S&P is nearing the top of its recent trading range. Low volume suggests investors aren’t entirely convinced the market can move substantially higher.
“Overall we’re still locked in a fairly narrow trading range, and that’s consistent with the jerky pattern of how the economy here and in developing worlds is unfolding,” said Joseph Battipaglia, market strategist at Stifel Nicolaus in Yardley, Pennsylvania.
The Fed’s Beige Book compilation of anecdotal reports confirmed the economy had begun to slow over the summer, a fact that had sent stocks sharply lower in August but that had little impact on Wednesday’s session.
The economy grew between mid-July and the end of August, but with signs of deceleration as compared to earlier periods. A separate report showed that consumer debt fell by $3.6 billion in July, which was much less than the $5.25 billion analysts were expecting.
The Dow Jones industrial average rose 46.32 points, or 0.45%, at 10,387.01. The Standard & Poor’s 500 Index added 7.03 points, or 0.64%, at 1,098.87. The Nasdaq Composite Index climbed 19.98 points, or 0.90%, at 2,228.87.
On Tuesday, stocks fell in light volume as investors seized on renewed concerns about European banks’ exposure to sovereign debt to sell shares after strong gains last week when the S&P 500 jumped more than 5% in three days.
This week has been shortened by the Labour Day holiday on Monday, while the Rosh Hashanah Jewish new year holiday could mean staffing and trading volume are reduced on Thursday and Friday, providing the potential for more volatility.
The S&P 500 is appearing to settle into the upper end of a recent trading range between 1,040 and 1,130.
An inverse head and shoulders formation has developed in the S&P 500 chart, a sign technical analysts believe could show the market has bottomed. The “neck line” is around the 1,130 mark, suggesting a possible breakout rally if stocks move above that.
“You’re in the process of building a base here,” said Marc Pado, US market strategist at Cantor Fitzgerald & Co in San Francisco. “The June, August highs of 1,130 are the key points, if you break above that then the year-end projection (of 1,250) ... becomes a fairly obvious upside projection.”
US-traded shares of BP Plc rose 3.2% at $38.37 after the company issued an internal report on the rig explosion that led to the worst US oil spill ever and the death of 11 crew members.
BP deflected much of the blame, claiming drilling contractor Transocean Ltd missed danger signs and criticized the cementing of the well conducted by Halliburton Co. Transocean gained 1.3% to $53.74, while Halliburton added 1.2% to $30.21.
Staples Inc was up 2% to $19.04, and Costco Wholesale Corp rose 1% to $59.21 after Goldman Sachs upgraded their stocks.
About 6.55 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, far below last year’s estimated daily average of 9.65 billion.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 2 to 1.