US stocks claw back half of ground lost post-British vote
U.S. stocks were on track to close sharply higher in late-afternoon trading Wednesday, echoing strong gains in global markets as investor worries about Britain’s vote to leave the European Union eased. Traders also got encouraging data on U.S. consumer spending.
Energy companies led the rally as the price of crude oil closed higher. Health care, industrials and financials stocks were also among the biggest gainers.
The Dow Jones industrial average and the Standard & Poor’s 500 index turned slightly positive for the year. Together with a big gain Tuesday, the market is on track to recoup about half of the steep losses it suffered Friday and Monday in the wake of Britain’s “leave” vote.
The Dow gained 284 points, or 1.6 percent, to 17,694 as of 3:15 p.m. Eastern Time. The S&P 500 index rose 36 points, or 1.8 percent, to 2,072. The Nasdaq composite added 93 points, or 2 percent, to 4,784.
European stock indexes posted gains that eclipsed Wall Street’s for the second day in a row. The British pound edged up against the dollar following its plunge to 31-year lows after the British vote last week.
“The market has moved from a shock,” said Erik Davidson, chief investment officer for Wells Fargo Private Bank. “The worries around ‘Brexit’ are now moving from short-term worries to long-term worries, and that’s why we’re seeing this dramatic rebound in the market.”
On Wall Street, investors had their eye on new data on consumer spending and the latest batch of company deal news.
The Commerce Department said that consumer spending increased 0.4 percent in May on top of a 1.1 percent surge in April. The data underscore that consumer spending, which accounts for about 70 percent of U.S. economic activity, picked up in the spring after getting off to a slow start in 2016.
The Canadian Imperial Bank of Commerce agreed to buy bank holding company PrivateBancorp for $47 per share in cash and stock, or $3.73 billion. News of the deal sent PrivateBancorp shares up 23.6 percent. The stock added $8.47 to $44.40.
Several oil and gas production and transportation companies also notched gains. Murphy Oil led the risers in the S&P 500 index, climbing $2.24, or 7.5 percent, to $32.32. Marathon Petroleum rose $1.91, or 5.4 percent, to $37.62.
Specialty pharmaceuticals company Mallinckrodt jumped $4.13, or 7.3 percent, to $60.36.
Tesaro more than doubled after the drug developer said its targeted pill for recurrent ovarian cancer prevented the disease from worsening for many months after chemotherapy ended. There’s no approved maintenance treatment to keep ovarian cancer at bay after chemotherapy. The stock gained $38.71 to $75.92.
Shares in Myriad Genetics, which makes the companion test given to patients before treatment with Tesaro’s drug, climbed $1.18, or 4 percent, to $30.76.
Global financial markets were rattled last Friday by the British “leave” vote, which many investors did not seem to anticipate. Stocks and oil fell, as did the pound, while bonds and gold rose thanks to their perceived status as safe havens. Ratings agency S&P slashed its top-shelf credit rating for the U.K.
But the two-day slump broke on Tuesday, as investors appeared to set aside their anxiety over Britain’s vote.
In another sign that investors’ worries are easing, the VIX, a gauge of expectation of future U.S. stock volatility, was down 10 percent Wednesday to 16.9. It had hit 25.8 on Friday.
“The VIX is literally where it was two weeks ago,” said Tom Siomades, head of Hartford Funds’ Investment Consulting Group. “(Investors) dumped everything on Friday, and when they came back, they realized things aren’t as bad and it’s going to take a long time to unwind this thing.”
On Wednesday, Britain’s benchmark stock index, the FTSE 100, was up 3.6 percent, while Germany’s DAX rose 1.7 percent. France’s CAC 40 gained 2.6 percent.
Earlier, stock markets in Asia closed broadly.
Japan’s Nikkei 225 rose 1.6 percent and South Korea’s Kospi gained 1 percent. Hong Kong’s Hang Seng index added 1.3 percent, while Australia’s S&P/ASX 200 rose 0.8 percent. Stocks in Taiwan, Singapore and Indonesia also were higher.
In currency markets, the British pound recovered some of its losses this week but remained near its 31-year low. It rose to $1.3434 from $1.3343 on Tuesday.
The yen, which strengthened sharply after the British referendum, bounced back after an early slide. The dollar fell to 102.62 yen from 102.79 yen. The euro rose to $1.1107 from $1.1049.
In energy futures trading, benchmark U.S. crude surged $2.03, or 4.2 percent, to close at $49.88 a barrel in New York. Brent crude, used to price international oils, also rose $2.03, or 4.2 percent, to close at $50.61 a barrel in London.
Among metals, gold rose $9 to $1,326.90 an ounce, silver gained 52 cents to $18.41 an ounce and copper added 1 cent to $2.19 a pound.
Bond prices fell. The yield on the 10-year Treasury note rose to 1.49 percent from 1.47 percent.
AP Business Writer Youkyung Lee contributed to this report from Seoul, South Korea.