Jump In Oil Prices Leads To Continued Rally On Wall Street - U.S. Commentary

(RTTNews) - Stocks moved sharply higher over the course of the trading day on Wednesday, adding to the strong gains posted in the two previous sessions. With the rally, the major averages continued to recover from last Thursday's lows.

The major averages moved roughly sideways going into the close, holding on to strong gains. The Dow surged up 257.42 points or 1.6 percent to 16,453.83, the Nasdaq skyrocketed 98.11 points or 2.2 percent to 4,534.06 and the S&P 500 jumped 31.24 points or 1.7 percent to 1,926.82.

The continued strength on Wall Street was partly due to a substantial increase by the price of crude oil, which has seen considerable volatility in recent sessions.

Crude oil for March delivery jumped $1.62 to $30.66 a barrel on the day after slipping $0.40 to $29.04 a barrel on Tuesday.

The rally by the price of crude oil came amid news Iranian Oil Minister Bijan Zanganeh has offered support for a plan to maintain a ceiling on oil production.

According to Reuters, Zanganeh told the Shana news agency Iran supports "any effort to stabilize the market and prices."

Stocks continued to perform well following the release of the minutes of the Federal Reserve's latest monetary policy meeting.

The minutes suggested some members of the Federal Open Market Committee were concerned about the downside risks posed by the recent tightening of global financial conditions.

Participants discussed altering their earlier views of the appropriate path for interest rates and agreed to closely monitor global economic and financial developments.

On the U.S. economic front, the Fed released a report shortly before the start of trading showing a much bigger than expected increase in industrial production in the month of January.

The Fed said industrial production climbed by 0.9 percent in January after falling by a revised 0.7 percent in December. Economists had expected production to rise by 0.4 percent.

A separate report from the Labor Department showed an unexpected uptick in producer prices in the month of January, while the Commerce Department reported a steep drop in housing starts during the month. Sector News

Benefiting from the sharp increase by the price of crude oil, energy stocks turned in some of the market's best performances on the day. The gains extended the upward move seen over the past few sessions.

While the NYSE Arca Oil & Gas Index jumped by 3.5 percent, the Philadelphia Oil Service Index and the NYSE Arca Natural Gas Index soared by 4.4 percent and 4.9 percent, respectively.

Substantial strength was also visible among steel stocks, as reflected by the 4.5 percent gain posted by the NYSE Arca Steel Index. With the gain, the index reached its best closing level in well over a month.

Internet stocks also saw significant strength on the day, driving the Dow Jones Internet Index up by 3 percent. Priceline (PCLN) helped lead the sector higher after reporting better than expected fourth quarter results.

Most of the other major sectors also moved notably higher on the day, with computer hardware, biotechnology software, and brokerage stocks posting standout gains.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index tumbled by 1.4 percent, while China's Shanghai Composite Index advanced by 1.1 percent.

Meanwhile, the major European markets all moved sharply higher on the day. While the French CAC 40 Index surged up by 3 percent, the U.K.'s FTSE 100 Index and the German DAX Index both jumped by 2.7 percent.

In the bond market, treasuries extended a recent pullback amid the continued strength on Wall Street. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.1 basis points to 1.819 percent.

Looking Ahead

In light of the recent focus on oil prices, the weekly report on oil inventories may attract attention on Thursday along with reports on weekly jobless claims and Philadelphia-area manufacturing activity.

On the earnings front, retail giant Wal-Mart (WMT) is scheduled to release its fourth quarter results before the start of trading on Thursday.