NEW YORK (Reuters) - Wall Street rallied in pre-holiday trading on Wednesday, helped by surging energy shares as an unexpected drop in crude oil inventories lifted beaten-down oil prices.
U.S. Treasury yields rose and the dollar edged higher after a three-session losing streak, as investors digested mixed economic data.
With oil’s 1-1/2-year slide worsening for most of this month, Wall Street’s performance has been closely tied to the price of crude, raising some concerns that weakness in the commodity would derail typical year-end strength in stocks.
Benchmark Brent crude LCOc1 rose 3.6 percent to $37.41 a barrel, while U.S. crude CLc1 prices settled up 3.8 percent at $37.50 a barrel, although trading was thin.
U.S. crude inventories fell 5.88 million barrels to 484.78 million barrels last week, the Energy Information Administration said, compared with a forecast rise of 1.4 million barrels.
“It seems in the very short term here the market has been taking some cues from what is going on in oil, and so strength in oil today has probably been a plus,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.
The Dow Jones industrial average .DJI rose 185.34 points, or 1.06 percent, to 17,602.61, the S&P 500 .SPX gained 25.32 points, or 1.24 percent, to 2,064.29 and the Nasdaq Composite .IXIC added 44.82 points, or 0.9 percent, to 5,045.93.
U.S. stock indexes tallied their third straight day of gains after declining following the Federal Reserve’s interest rate hike last week.
“The sell-off that we had coming into the Christmas week here is probably more than anything responsible for the bounce back,” said Jim Paulsen, chief investment strategist at Wells Capital Management in Minneapolis.
The pan-European FTSEurofirst 300 index .FTEU3 rose 2.8 percent. Mining stocks rallied, with Anglo American (AAL.L) and Glencore (GLEN.L) each up more than 8 percent, helped by a 1.2 percent rise in copper prices CMCU3.
“Brent crude above $35 per barrel and copper above $2 per pound should be enough to fend off commodity sector bears into the year end,” said Jasper Lawler, analyst at CMC Markets.
MSCI’s all-country world stocks index .MIWD00000PUS rose 1.3 percent.
New orders for U.S. manufactured capital goods fell in November and the prior month’s increase was revised sharply lower. But other U.S. data showed consumer sentiment at a five-month high in December and personal income rising for an eighth straight month in November.
U.S. Treasury yields rose, with 30-year yields hitting one-week highs after the economic data supported views of a swift pace of Fed rate hikes next year and the oil price gains suggested higher inflation.
Benchmark 10-year U.S. Treasury notes US10YT=RR were down 6/32 in price to yield 2.264 percent.
“We’ve been in somewhat of a down cycle in economic numbers, and they are starting to gather a little bit of steam,” said Ellis Phifer, market strategist at Raymond James in Memphis, Tennessee.
The dollar index .DXY, which measures the greenback versus a group of six currencies, inched up 0.06 percent.
“Higher U.S. Treasuries yields is providing some support for the dollar,” said Eric Viloria, currency strategist at Wells Fargo Securities in New York.
Spot gold XAU= edged down 0.3 percent in thin trade.
Additional reporting by Sam Forgione and Richard Leong in New York, and Sudip Kar-Gupta in London; Editing by Meredith Mazzilli and Dan Grebler