Stocks and commodities rebound; oil back above $100

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

Wednesday was a big reversal day in financial markets, as battered commodities and stocks rebounded and some investors pulled back from the haven of U.S. Treasury bonds.

The Dow Jones industrial average added 80.60 points, or 0.6%, to 12,560.18, led by energy and heavy-industry shares -- many of which have taken a pounding in recent weeks on concerns that the U.S. economy was slowing.

Commodities overall had their best day since March 17, as measured by the Thomson Reuters/Jefferies CRB index of 19 major raw materials. The index (charted at left) jumped 2.3% to 344.21 after falling to a three-month low on Tuesday.

Commodities have tumbled since late April as some investors have cashed out hefty paper gains from the rally that began last September. Fears about weaker economic growth also helped drive profit-taking in materials, as did a rising dollar.

But those worries took a back seat on Wednesday. Buyers poured back into wheat, corn and soybean futures as rain in the U.S. Midwest and drought in Europe threatened to reduce estimates of this year’s global harvests.

Wheat futures in Chicago surged 53 cents, or 6.9%, to $8.17 a bushel. Corn jumped 29.5 cents, or 4.1%, to nearly $7.50 a bushel. Wheat’s recent high was $9.04 a bushel on Feb. 14; corn reached $7.81 on April 11.

In energy-futures trading, crude oil rose back above $100 a barrel after government data showed U.S. crude inventories fell slightly last week, surprising analysts who had expected an increase.

June oil futures in New York gained $3.19 to $100.10 a barrel. The price had fallen to $96.91 on Tuesday, the lowest since Feb. 22 and down from the recent peak of $113.93 on April 29.

The general rebound in raw materials also gave a lift to silver and gold. Silver, which rocketed 57% in the first four months of this year to $48.58 an ounce -- then plummeted to $33.49 by Tuesday -- rose $1.61 to $35.09 on Wednesday. That’s still below its price of a week ago.

Gold added $15.80 to $1,495.60 an ounce.

Investors’ renewed appetite for risk drained money out of Treasury bonds, pushing yields higher. The 10-year T-note yield rose to 3.18% from a five-month low of 3.12% on Tuesday.

Some analysts said the release of the Federal Reserve’s minutes from its last meeting helped trigger selling in bonds by spelling out the central bank’s planned “exit strategy” from its easy-money policy.
But bond yields were rising well before the minutes were released at 11 a.m. PDT.

“We had gotten so overbought in Treasuries it was ridiculous,” said Mike Kastner, a partner at Halyard Asset Management in White Plains, N.Y., referring to the rally in recent weeks that had pushed yields sharply lower. The market was due to give some back, he said.

-- Tom Petruno

RELATED:

Economic doubts make for two-faced stock market

Corporate profit boom supports stocks and -- finally -- job growth