Stocks finish with gains
A jump in commodities gives Wall Street a boost as investors shrug off morning weakness to recharge the advance.
NEW YORK (CNNMoney.com) -- Stocks gained Wednesday, fighting back from early losses, as investors scooped up oil and other commodity shares following a nearly 5% rally in crude prices.
The Dow Jones industrial average (INDU) gained 61 points, or 0.7%. The S&P 500 (SPX) index added 7 points, or 0.7%. The Nasdaq composite (COMP) rose 13 points, or 0.7%.
Stocks slumped in the early going, but managed to trim declines as the morning wore on, eventually staging a rally. A spike in oil prices and the underlying stocks helped drive the advance, after the Energy Information Administration reported a surprise drop in crude inventories.
Wall Street rallied Tuesday after Home Depot's profit report and forecast reassured investors worried about struggling consumers. But the volume was light, even for late summer, which traders say suggests little conviction on the part of buyers. Light volume also makes stocks more volatile.
"You're carrying a lot of dead weight because there aren't as many participants right now, but considering all that, it's still doing well," said Dan Genter, president and CEO at RNC Genter Capital Management. "We're still within 2% or 3% of the 2009 highs from last week."
The nearly five-month advance has hit some turbulence over the last week as investors have weighed expectations for a recovery with indications that any recovery will be tepid. While recent reports show manufacturing and housing are starting to stabilize, consumer spending remains sluggish and unemployment continues to rise.
Genter said that a period of upside earnings surprises and signs of stabilization in the economy have given both institutional and retail investors some relief lately.
"Optimism may not be high, but investors have at least moved to a neutral position," he said. "They are still not spending, but they aren't hoarding cash to the same extent either."
Thursday preview: Reports on jobless claims, leading economic indicators (LEI) and manufacturing are all due Thursday.
The number of Americans filing claims for unemployment last week is expected to have fallen to 550,000 from 558,000 in the previous week, according to Briefing.com estimates. The Labor Department report is due before the start of trading.
The Conference Board's July LEI index is due after the start of trading. LEI is expected to have risen 0.7% after rising 0.7% in June.
The Philadelphia Fed index, a regional reading on manufacturing, is also due after the start of trading. The index is expected to have improved to negative 2 in August from negative 7.5 in July. A negative reading indicates weakness in the sector.
Oil prices jump: Crude prices surged after the government's weekly inventory report showed a surprise drop in supplies. U.S. light crude oil for September delivery rose 4.7%, or $3.23, to settle at $72.42 a barrel on the New York Mercantile Exchange.
A rally in crude prices gave a boost to oil stocks, including Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500). The Amex Oil index gained 1.6%.
HP: After the close Tuesday, Hewlett-Packard (HPQ, Fortune 500) reported lower quarterly sales and earnings that topped analysts estimates. Mark Hurd, the company's CEO said business is stabilizing, but it is too soon to say the economy has turned a corner.
The tech leader also boosted its current-quarter earnings forecast and reiterated its full-year revenue forecast. Shares drifted lower Wednesday.
Among other movers, shares of Dow component Alcoa (AA, Fortune 500) declined on a Goldman Sachs downgrade, according to published report. The brokerage cut its rating on the aluminum stock because it has surged sharply in recent weeks and industry conditions could deteriorate.
World markets: Asian markets tumbled, with the Chinese market losing 5% on worries about the economy. The Shanghai Composite has lost almost 20% in two weeks, a decline that is typically measured as a bear market.
China is seen as an indicator of the health of the global economy. It is also a big buyer of American and European products. Should it experience a bigger slowdown, that would pressure an already fragile U.S. recovery.
European markets tumbled through the morning, but ended the day in mixed territory.
Bonds: Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.45% from 3.51% Tuesday. Treasury prices and yields move in opposite directions.
Other markets: COMEX gold for December delivery rose $5.60 to settle at $944.80 an ounce.
In currency trading, the dollar fell versus the euro and the Japanese yen.
Market breadth was positive. On the New York Stock Exchange, winners topped losers three to two on volume of 988 million shares. On the Nasdaq, advancers beat decliners eight to five on volume of 1.99 billion shares. 
Don't like Obamacare? Here's an alternative
Class of '09: Who's working and who isn't
A town the recession never hit
100 Fastest-growing companies
Fed shows a little optimism
Don't get laid off
Deficit: What caused it, why it matters
America's best places to live
50 years of profit swings
