US stocks rose broadly on Wednesday, led by the energy sector as investors viewed the recent declines in companies such as Halliburton, Baker Hughes and Exxon Mobil as overdone, while a better-than-expected report on pending home sales also boosted sentiment.
The Dow Jones Industrial Average climbed 225.52 points (2.25%) to 10,249.54, its third-biggest one-day gain this year. However, the measure is still down 8.53% from its 2010 closing high, reached in late April, and is off 1.71% for the year to date.
Among the Dow's top performers on Wednesday, American Express jumped $1.78 (4.5%) to $40.97, and Walt Disney added $1.41 (4.2%) to $34.74. The chairman of Disney's consumer products business said the company is targeting $50bn in retail sales within the next five to seven years.
The Dow's energy components were also particularly strong, with Exxon Mobil rising $1.52 (2.6%) to $60.77, and Chevron up $1.84 (2.6%) to $74.13. The stocks had been beaten down with the rest of the sector in recent weeks as crude-oil futures have fallen and worries over the BP oil spill have increased. On Wednesday, investors were buying and even American depositary shares of BP, which is not a Dow component, rose $1.14 (3.1%) to $37.66.The Nasdaq Composite rose 58.74 (2.64%) to 2,281.07. The Standard & Poor's 500 index advanced 27.67 (2.58%) to 1,098.38, with all its sectors ending the session solidly higher, led by energy.
Leading the energy sector's gains, Halliburton jumped $2.53 (12%) to $23.68, and Baker Hughes climbed $3.76 (10.5%) to $39.63. Halliburton, which performed the cementing job and other services related to the development of BP's blown-out deepwater well, said it expects to be fully indemnified from all claims and expenses resulting from the oil spill moving through the US Gulf of Mexico.
Ford Motor added 44 cents (3.9%) to $11.85. The car maker posted a 22% increase in May US light-vehicle sales as it benefited from high demand for its crossovers and trucks, as well as strong fleet sales. Ford also slightly boosted its second-quarter production target by 15,000 vehicles to 640,000.
Amgen jumped $5.33 (11%) to $56.09. The drug company received US Food and Drug Administration approval for its Prolia treatment for osteoporosis in postmenopausal women, a decision that comes almost two months earlier than expected. A broker forecasts that global sales of the drug could reach more than $2bn a year.
Alexion Pharmaceuticals advanced $3.50 (7.2%) $52.34. The company raised its full-year earnings forecast, noting it plans to launch its flagship blood-disorder treatment in Japan three months earlier than expected.
Continental Airlines climbed $2.25 (11%) to $22.54, after data released by the airline showed it continued to accelerate its gains in a key measure of profitability for carriers in May, as its traffic also returned to growth last month.
American depositary shares of Novo Nordisk rose $3.52 (4.7%) to $79.28. The Danish pharmaceutical company said it will launch diabetes treatment Victoza in Japan in June, as the country's authorities have now approved the price of the drug.
E*Trade Financial rose 79 cents (5.6%) to $14.99, following the online brokerage's reverse stock split. The measure moved the stock out of the sub-$2 level and cut its number of authorised shares outstanding to 400m from 4bn. E*Trade's 1-for-10 stock split combines 10 shares of issued and outstanding common stock into one share of common stock.
For Australian ADRs listed on the NYSE, BHP Billiton firmed $2.26 (3.61%) to US$64.90, Rio Tinto Plc added $1.96 (4.38%) to US$46.71, ResMed advanced $1.68 (2.65%) to US$64.98, Telstra Corporation improved 53 cents (4.35%) to US$12.71, Telecom Corporation of NZ climbed 13 cents (2.06%) to US$6.45 and Westpac increased $2.08 (2.21%) to US$96.30.
In economic news, US pending home sales rose beyond expectations as buyers signed contracts to collect a government tax credit. The National Association of Realtors' index for pending sales of used homes increased 6% to 110.9, the third gain in a row. Economists were expecting an increase of 5%.
US auto sales climb broadly in May, continuing a trend of expected improvement from the industry's poor showing last year. Ford Motor posted a 22% increase in light-vehicle sales while GM's sales jumped 32% to 222,305 vehicles.
At 7:45 AM (AEST), the 10-year Treasury note yield was 3.34% and the five year yield was 2.13%.
European shares ended little changed on Wednesday, with losses among commodity-sector companies tempered in the wake of stronger-than-expected US housing data.
The Stoxx Europe 600 index eked out a gain of 0.06 point to 245.40 after having tallied mild gains on both Monday and Tuesday.
Shares of BP, which had fallen more than 2% at one point, ended the day just 0.1% lower after a steep plunge on Tuesday. The Obama administration, searching for ways to respond to the worst spill in US history, opened civil and criminal investigations of the disaster.
The rest of the European-listed oil sector moved lower, with oil-service shares particularly weak: Petroleum Geo-Services fell 2.1% and Technip dropped 3.3%.
Miners also fell, with Anglo American shares falling 2.1%, as metal futures declined.
London's commodity-heavy FTSE 100 index fell 0.2% to close at 5,151.32. Meanwhile, the French CAC-40 index fell 1.58 points to close at 3,501.50 and the German DAX index also ended virtually unchanged, losing 0.07 point to 5,981.20.
Banks, leveraged to prospects for economic growth, were weak on Wednesday, with shares of Societe Generale losing 1% and Credit Agricole sinking 1.2%.
Elsewhere in the financial sector, Prudential Plc fell 2.5%. The company said it is withdrawing from an agreement to acquire AIA Group, the Asian life insurance unit of American International Group. Backing away will cost Prudential about GBP450m, the UK insurer said.
On the FTSE 100, Rio Tinto dropped 14.00 pence (0.44%) to 3,112.02 pence and BHP Billiton shed 18.50 pence (0.99%) to 1,852.39 pence.
Asian stock markets were mixed on Wednesday, with a brief climb in the Japanese market giving way to a decline after traders had time to digest the resignation of the country's prime minister.
Japan's Nikkei Stock Average closed down 1.1% at 9,603.24, retreating from a two-session intraday high of 9,763.41. Hong Kong's Hang Seng Index fell 0.1%, reversing earlier gains. China's Shanghai Composite Index added 0.1%.
New Zealand shares ended lower, tracking offshore markets, with trade remaining thin as most investors opted to stick to the sidelines on a lack of local leads. The benchmark NZX-50 ended down 1.2%, or 35.87 points, at 3,018.89.
Base metals on the London Metal Exchange pared earlier losses, helped by a rise in US equities and a rebound in oil prices. Aluminium fell $5 (0.25%) to $1,990 while copper weakened $105 (1.55%) to $6,690 and nickel dropped $575 (2.81%) to $19,900. Zinc shed $70 (3.72%) to $1,810 and lead lost $75 (4.23%) to $1,700. Comex copper was last quoted at 305.55 US cents per pound.
Gold lost some, but not much, of its lustre on Wednesday when Europe's debt problems didn't get any worse, resulting in some abatement of the recent flight to safety. Spot gold was last quoted at $1,222.75. Comex gold futures slid $4.30 (0.35%) to $1,222.60. Spot silver was last quoted at $18.29.
Crude-oil rose slightly, supported by positive reports on auto and home sales that pointed to a steady recovery in the US economy. West Texas Intermediate was last quoted at US$72.86 per barrel.
At 07:45 a.m. (AET) the US dollar was quoted at 0.8162 euros, 92.22 yen, 1.187 AUD and 68.23 pence.