Stocks Bounce Back as Energy Stocks Rise

Stocks regained ground Wednesday as a rise in crude oil prices helped buoy energy stocks.

Wall Street had languished in early trading following a sell-off in Asia. Investors have become concerned about the pace of a global economic recovery, sending China's Shanghai Composite Index tumbling 4 percent. That spread to the European markets and initially kept U.S. traders cautious.

But by the afternoon, U.S. stocks had regained their footing. The Dow Jones industrial average was up 0.7 percent, or 61.22 points, closing at 9279.16, while the Standard & Poor's 500-stock index gained 0.7 percent, or 6.79 points to 996.46. The technology-focused Nasdaq gained 0.7 percent, or 13.32 points to 1969.24.

U.S. investors appeared focused on a rebound in crude oil prices. Prices were up more than 4 percent to $72.42 a barrel on the New York Mercantile Exchange, following a government report showing that the crude oil inventory had fallen by an unexpectedly large amount last week.

ConocoPhillips and Chevron were up 1.2 percent and 1.8 percent, respectively. Exxon Mobil climbed 2.3 percent.

The drop in crude oil inventory and the spike in prices is probably an anomaly that will dissipate because demand remains weak, said Phil Flynn, oil analyst at PFGBest Research in Chicago. "Did demand dramatically go up? It really didn't," he said.

Investors have become nervous that Wall Street's summer rally sprinted ahead of signs of an economic recovery. All of the major indexes have risen at least 40 percent since hitting a low point in early March. Some traders have speculated that Wall Street would see a major pullback as the economy continued to sputter. But after a major sell-off Monday, stocks have regained ground during the past two trading days.

Stocks are likely to bounce around over the next few months, said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. But "looking out twelve to eighteen months I am still optimistic," he said.