Wall Street rebounds as oil prices ease, banks surge
U.S. stocks rebounded on Tuesday, with the Dow Jones industrial average achieving three-digit gains as oil prices eased from its fresh multi-year high, soothing concerns that surging oil could hurt economic recovery , Xinhua reported .
U.S. stocks have been mostly moving in opposite directions against oil in recent weeks. Investors were worried that soaring oil prices could increase corporate costs, hurt consumer spending, and put world recovery in jeopardy.
After hitting a new high in more than two and a half years, crude prices retreated on Tuesday after Kuwaiti Oil Minister Sheikh Ahmed al-Abdullah al-Sabah said the Organization of the Petroleum Exporting Countries (OPEC) was "in consultations about a potential output increase."
With the oil supply disruption in Libya, the largest oil producer and exporter Saudi Arabia has already raised output to make up the shortfall. And according to the Financial Times, Kuwait, Nigeria and United Arab Emirates are also considering to produce more crude oil.
Besides, the U.S. is weighing to tap strategic oil reserves in order to dampen the surging prices. All these helped tackle the fears among the market participants and so helped curb the oil prices.
Light, sweet crude for April delivery dropped to as low as 103. 33 U.S. dollars a barrel before settling at 105.02 dollars a barrel on the New York Mercantile Exchange, while in London, Brent crude fell 1.7 percent to finish at 113.06 dollars a barrel.
Also boosting the market, stocks of big banks rallied across the board on Tuesday after the Bank of America predicted lower costs and higher dividend in the years to come during its investor meeting.
Chief Executive Officer Brian Moynihan told analysts and investors that the company planned to increase its dividend in the second half of 2011 and return to shareholders any excess capital more than 30 billion dollars after 2013 and 2014.
Meanwhile, Moynihan also estimated that company revenue growth could surpass the U.S. economic growth by 100 basis points as loan loss provisions return to normal levels as the economy turns healthy.
Bank of America was the biggest winner among the 30 Dow components, with a gain of 4.7 percent. American Express and JP Morgan Chase, the other two major banks in the Dow, were also among the leaders, gaining 3.50 percent and 2.68 percent respectively.
As of Tuesday's close, the Dow Jones industrial average jumped 124.35 points, or 1.03 percent, to 12,214.38. The Standard & Poor' s 500 Index was up 11.69 points, or 0.89 percent, to 1,321.82. The Nasdaq rallied 20.14 points, or 0.73 percent, to 2,765.77.