Stocks and commodities rally as selling pressure eases

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Risk takers returned to financial markets Thursday, boosting most stocks and commodities after three days of losses.

The situation at Japan’s Fukushima nuclear power complex remained grave, but markets’ sell-off earlier this week had left them primed for at least a short-term bounce in the absence of worse news from Japan, some analysts said.

Some upbeat U.S. economic data, including another decline in weekly jobless benefit claims, also helped Wall Street’s mood. That may have given some sellers pause.

The Dow Jones industrial average rallied 161.29 points, or 1.4%, to 11,774.59, recouping about 37% of the 430-point, or 3.6%, decline from Monday through Wednesday.

The broader market also climbed, and rising stocks outnumbered losers by more than two to one on the New York Stock Exchange. But trading volume was modest.

Stocks’ rebound interrupted the flow of money seeking a haven in Treasury bonds. The 10-year T-note yield rose to 3.26% after falling to a three-month low of 3.19% on Wednesday.

Overnight, Japan’s Nikkei 225 stock index recovered from a 5% plunge early in Thursday’s trading session to close down 1.4%, at 8,962. The Nikkei had slumped 6.2% on Monday and 10.6% on Tuesday, then rebounded 5.7% on Wednesday.

Japanese stocks pared their losses Thursday even though the yen continued to strengthen, to a record 78.89 per dollar from 79.39 on Wednesday. The surging yen is threatening Japan’s exporters, with the economy already reeling. But Japanese authorities so far have chosen not to intervene in the currency market. Finance ministers of the Group of Seven industrial nations were scheduled to hold a teleconference meeting beginning at 3 p.m. PDT on Thursday, and the yen was expected to be a topic.

Commodities attracted buyers after some speculators had retreated earlier in the week as Japan’s crisis deepened. The Thomson Reuters/Jefferies CRB index of 19 major commodities surged 3.1% after sinking 6.8% from March 7 through Wednesday.

But there was bad news for consumers in the commodity rebound: U.S. crude oil futures in New York jumped $3.44 to $101.42 a barrel, the highest level since March 10, as Libyan strongman Moammar Kadafi appeared poised to crush rebels who have taken control of key eastern cities.

Once Japan’s nuclear crisis stabilizes, Wall Street’s focus is likely to turn back to the Middle East and North Africa, and the potential for more unrest in those regions.

-- Tom Petruno

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