US stocks rebound as anxiety over British vote eases
U.S. stock indexes were solidly higher in early trading Tuesday as investors welcomed encouraging data on the economy and housing. The rebound followed even bigger gains in Europe as global markets recovered from a two-day rout triggered by Britain's vote to leave the European Union.
Energy companies led the rally as the price of crude oil turned higher. Consumer and technology stocks also notched gains. Banks and other financial companies, which took the heaviest losses in the sell-off, also rose. Bond prices fell, sending yields higher.
The Dow Jones industrial average gained 184 points, or 1.1 percent, to 17,323 as of 10:25 a.m. Eastern Time. The Standard & Poor's 500 index rose 23 points, or 1.2 percent, to 2,024. The Nasdaq composite added 76 points, or 1.7 percent, to 4,671.
The euro and the British pound were moving higher, though the pound remained near its lowest levels since 1985.
Uncertainty and anxiety over the economic fallout from Britain's vote to leave the European Union has roiled global financial markets since Friday and prompted ratings agencies to slash their top-shelf credit rating for the U.K.
Investors appeared to shake off their some of their jitters ahead of Tuesday's meeting between British Prime Minister David Cameron and his European Union counterparts. Cameron has signaled he might not trigger a clause setting in motion the U.K.'s exit from the EU before October.
In the U.S., a new batch of economic data helped put traders in a buying mood.
The Commerce Department raised its estimate of U.S. economic growth in the first three months of the year. Separately, a key gauge of home values showed U.S. home prices climbed in April, hitting record highs in several cities.
Nine of the 10 sectors in the S&P 500 index rose, led by energy companies.
Newfield Exploration rose 2.08, or 5.2 percent, to $42.49, while Marathon Oil gained 70 cents, or 5.1 percent, to $14.36.
Data storage companies Western Digital and Seagate Technology also rebounded a day after posting big losses. Western Digital added $2.10, or 5 percent, to $44.28, while Seagate rose $1.40, or 6.7 percent, to $22.28.
Earlier in Asia, markets bounced back from early losses as leaders signaled they were ready to step in with support policies. Japan's benchmark Nikkei 225 index climbed 0.1 percent, while South Korea's Kospi added 0.5 percent.
Hong Kong's Hang Seng Index was a laggard, losing 0.3 percent. It was dragged down by companies with high exposure to Europe, such as billionaire tycoon's Li Ka-shing's CK Hutchison Holdings, which has British retail, ports and telecom investments and fell 1.7 percent.
"When you pull a spring, after you let it go it oscillates up and down for a little while and that's still what we're seeing in the markets," said Andrew Sullivan, a sales trader at Haitong Securities. "This is nothing about individual companies per se, this is about the effect of forex on their earnings."
Beyond the pound, other currencies have also been very volatile. The Japanese yen strengthened in recent days due to its perceived status as a safe haven. The euro had fallen on concern that Britain's trouble would hurt the rest of the region.
On Tuesday, the yen eased slightly against the dollar, though it was still hovering near its strongest level in two years. The dollar rose to 102.54 yen from 101.97 on Monday. The euro strengthened to $1.1061 from $1.1005.
Benchmark U.S. crude rebounded 94 cents, or 2 percent, to $47.27 a barrel in New York. Brent crude, used to price international oils, rose 86 cents, or 1.9 percent, to $48.04 a barrel in London.
Bond prices fell. The yield on the 10-year Treasury note rose to 1.47 percent from 1.44 late Monday.