Wall Street gained on Tuesday, with the Dow Jones Industrial Average hitting a six-year high on the back of energy stocks and strong earnings reports.
Markets had been pushed lower in frenetic trading on Monday after CNBC reported that Ben Bernanke, chairman of the Federal Reserve, believed the market had misinterpreted his congressional testimony as being dovish.
“I think [the CNBC report] really did surprise people,” said Fritz Meyer, senior investment officer at AIM Investments. “The market really wants a pause [in rate increases].”
But Wall Street recovered on Tuesday, buoyed by energy companies benefiting from the rise in crude oil prices, and robust earnings reports from Archer Daniels Midland, St Paul Travelers, and Texas Utilities.
At the close, the S&P 500 was up 8.02 points, or 0.6 per cent, at 1,313.21, the Nasdaq composite was up 5.05 points, or 0.2 per cent, to 2,309.84 and the Dow was 73.16 points, or 0.6 per cent, higher at 11,416.45.
Energy stocks pushed higher amid continued supply worries from Iran. Market unease was exacerbated by the decision of Evo Morales, president of Bolivia, to nationalise the country’s foreign-run gas fields.
Nymex crude for June delivery closed at $74.61, its third successive day of increases. In that time crude has risen more than 5 per cent.
Exxon Mobil gained 2 per cent at $64.67, while ChevronTexaco added 2.7 per cent to $62.80.
Two silver mining stocks with significant Bolivian operations suffered severe falls after recent run-ups. Coeur dAlene fell 8.3 per cent, on the second-heaviest volume on the NYSE, while Amex-quoted Apex Silver Mines dropped 15.7 per cent.
Archer Daniels Midland, the ethanol maker and processor of agricultural commodities, also benefited from high oil prices. It reported stronger than expected earnings for its fiscal third quarter to March 31. Its shares rose 10.3 per cent to $41.90 in exceptionally heavy trading.
Other ethanol makers have gained after the adoption this week of new fuel additive standards for cars that increasingly favour ethanol. Pacific Ethanol gained 8.7 per cent to $36.94.
Insurer St Paul Travelers turned in better than expected earnings thanks to a mild winter. It unveiled a plan for a $2bn share buy-back, sending its price 5.1 per cent higher to $45.60.
Insurer Safeco rose after it reported earnings 23 per cent above analyst forecasts. Shares jumped 4.7 per cent to $54.10.
The utilities sector posted one of the biggest gains on the S&P 500, with the S&P Utilities Index up 1.4 per cent on Tuesday.
Texas Utilities surged 15 per cent to $57.50 after it reported a 37 per cent rise in first-quarter net income and said it would build coal-powered stations outside Texas.