Stocks rose on Wednesday as better-than-estimated growth in home sales and stabilizing loan demand at Bank of America bolstered optimism in the economy.
The Dow Jones industrial average closed up 225.52, or 2.25%, at 10,249.54; the S&P 500 rose 27.67, or 2.58%, closing at 1,098.38; and the Nasdaq composite was up 58.74, or 2.64%, to close at 2,281.07. All numbers are preliminary.
U.S. equities rebounded after Tuesday's slump dragged benchmark indexes to near three-month lows. Stocks extended gains in early trading as pending sales of existing homes rose to the highest level since October as buyers took advantage of a tax credit. Benchmark indexes rallied to session highs in the final hour as Bank of America CEO Brian Moynihan said he sees “more than hopeful signs” on loan demand.
“The economic data is strong,” said James Thorne, who oversees $2 billion as chief investment officer for equities at MTB Investment Advisors. “What the market's priced in right now is a double-dip recession already.”
The S&P 500 bounced back from Tuesday's 1.7% slump. The index's energy shares rallied 2.8% on Wednesday for the top advance among 10 industries on speculation the group's 18% tumble from April 23 through Tuesday overshot the potential damage to profits from BP's Gulf of Mexico oil spill.