Stocks rally 2 percent on energy boost
U.S. stocks rallied on Wednesday, fueled by a rebounding energy sector, as investors regained confidence after the previous session's huge sell-off.
The Dow Jones industrial average rose 225.5 points, or 2.3 percent. The S&P 500 index added 28 points, or 2.6 percent, and the Nasdaq composite rallied 59 points, or 2.6 percent.
Gains were broad-based on Wednesday, with energy stocks leading the way. All of the Oil and Natural Gas Index's 24 components posted gains, while the Amex Oil Index added 3 percent, with all 12 of its components also rising.
Oil turns higher
Oil prices erased losses Wednesday as stocks turned higher, led by a jump in energy shares.
Crude oil for July delivery rose 28 cents to settle at $72.86 a barrel Wednesday. Prices fell almost 2 percent Tuesday after a trio of reports showed manufacturing activity slowed in China, Europe and America.
The national average price for a gallon of regular unleaded gasoline fell to $2.723, down from the previous day's price of $2.727, according to motorist group AAA. That's the 27th straight day of declines, and prices have fallen more than 7 percent in that period.
Oil prices were lower earlier in the day after Japan's prime minister resigned, sending the nation's Nikkei stock index down 1.1 percent. European markets pared losses to end little changed and U.S. stock indexes closed over 2 percent higher, boosting crude prices. Oil investors tend to look to stock markets as an indicator of future global fuel demand.
Energy shares were higher Wednesday. Halliburton and Andarko gained 2 percent and shares of BP, which have been battered of late due to the Gulf of Mexico oil debacle, rose nearly 1 percent.
Dollar rises against yen and euro
The dollar gained against the yen and euro Wednesday following the resignation of Japanese Prime Minister Yukio Hatoyama.
The dollar posted a 0.1 percent gain over the Japanese yen, to ¥92.229 Wednesday, after rising as much as 1.3 percent in the trading session.
Meanwhile, the dollar inched up about 0.03 percent against the euro to $1.225, a day after the euro touched a fresh four-year low of $1.2111. The dollar was virtually flat against the the British pound at $1.465.
The yen retreated against the dollar and other major currencies Wednesday after Japanese Prime Minister Yukio Hatoyama announced his resignation. Concerns about political instability in the country put downward pressure on the yen, as did expectations about Hatoyama's possible successor -Finance Minister Naoto Kan – who favors a weaker currency to aid the recovery of the Japanese economy. Investors are wary of driving the yen higher as they await the outcome of elections expected to be held later in the week.
CNNMoney.com reporters Annalyn Censky, Blake Ellis and Julianne Pepitone contributed to this report.