NEW YORK (Reuters) - Stocks rose on Wednesday, bouncing back after five days of sharp losses that pushed the S&P 500 and the Nasdaq below their key technical levels.
Sectors linked with economic growth led the way higher as their recently beaten-down prices made them attractive to bargain hunters. The S&P financial sector index rose 1.6 percent. Bank of America gained 3.5 percent to $8.84.
On Tuesday, the S&P 500 closed below its 50-day moving average for the first time since December, and the level provided technical resistance in Wednesday’s rebound.
The S&P’s 50-day moving average is now near 1,373, close to today’s session high.
“If you look at the factors that pushed us lower in the past five days - concerns about the earnings season and the European financial system weakening again - those factors seem to have abated,” said Eric Kuby, chief investment officer of North Star Investment Management Corp in Chicago.
Alcoa Inc shares rose 7.7 percent to $10.03 a day after the Dow component reported a first-quarter profit instead of a loss that Wall Street was expecting, easing concerns about a weak earnings season.
The Dow Jones industrial average was up 94.53 points, or 0.74 percent, at 12,810.77. The Standard & Poor’s 500 Index was up 11.68 points, or 0.86 percent, at 1,370.27. The Nasdaq Composite Index was up 29.10 points, or 0.97 percent, at 3,020.32.
Tuesday marked the S&P 500’s largest daily percentage in four months. Investors will evaluate if the slide presents an opportunity for those who missed the market’s gains in the first three months of the year.
Calming fears about the euro zone, European Central Bank Executive Board member Benoit Coeure said on Wednesday the central bank still had the Securities Market Programme (SMP) in place allowing it to purchase the debt of euro-zone nations, should the need arise.
Glass container maker Owens Illinois was the S&P 500’s largest gainer a day after the company said it expects a 35 percent rise in its first-quarter profit. In Wednesday’s session by midday, the stock was up 6.9 percent at $23.53 after earlier touching a session high at $24.47.
In contrast, the U.S.-listed shares of Nokia tumbled 12.9 percent to $4.38 after the mobile phone maker warned its phone business would post losses in the first two quarters this year, as it struggles to revamp its product line.
Bearish analysts, however, see more declines ahead as a result of an overextended market that has lost its footing as the euro zone’s debt crisis resurfaces and U.S. economic indicators soften.
Still, the economy would have to take a “fairly dramatic” negative turn for the Federal Reserve to launch another round of monetary stimulus, said Dennis Lockhart, the president of the Federal Reserve Bank of Atlanta.
Signals that the Fed was not keen to push for more stimulus triggered the market pullback that started last week.
Investors have an eye on developments in Indonesia after a massive earthquake and aftershocks struck off its coast, bringing back memories of a 2004 tsunami that killed about 230,000 people in 13 Indian Ocean countries, including Thailand, Sri Lanka and India.
The low-volume Market Vector Indonesia Index ETF gained 0.6 percent.
Editing by Jan Paschal