Rally on! Dow soars 250, back in the black for 2015

U.S. stocks traded 1 percent higher on Wednesday as investors eyed the morning’s rally in bond yields and looked ahead to data that could shed light on the timing of a rate hike. (Tweet This)

The Dow Jones industrial average extended gains to trade about 250 points higher as investors cheered a Bloomberg report that Germany is said to consider offering Greek Prime Minister Alexis Tsipras aid in return for committing to one economic reform, sources familiar with Germany’s position told the news service.

Earlier, the blue chip index gained more than 200 points in morning trade as the major averages rebounded from recent lows. The Dow transports also recovered, up 0.9 percent.

“I really believe fundamentals drive markets and fundamentals in the U.S. are coming back,” said Doug Cote, chief market strategist at Voya Investment Management.

The U.S. 10-year Treasury yield traded near 2.48 percent, off its highs of 2.49. The early rally followed gains in the German 10-year bund yield to above 1 percent for the first time since Sept. 25, 2014, as investors found signs of improvement in European economic data.

The bund yield pared gains to hold near 0.99 percent. Major European stock indices gained more than 1 percent despite earlier lack of resolution on the Greece debt talks. The ATHEX Composite fell 1 percent.

“Improved macroeconomic data globally should go hand-in-hand with selling in Treasurys and increases in yields,” said Art Hogan, chief market strategist at Wunderlich Securities.

“Sadly this quiet move higher (in equities) is being done at pretty low volume,” he said.

The rally in yields sent financials 1.5 percent higher as the second-best performer in the S&P 500. Goldman Sachs, Morgan Stanley, JPMorgan Chase, Wells Fargo and PNC Financial all hit new highs.

Gains in oil boosted energy more than 1 percent to trade among the leaders in the S&P 500. Chevron was among the blue chip leaders as all the stocks in the index advanced. Crude oil held higher as the weekly inventory report indicated U.S. production is leveling off.

“Today is a little setting up for the retail sales number (tomorrow),” said JJ Kinahan, chief strategist at TD Ameritrade. He is watching for pickup in the ex-autos and ex-gasoline figure.

“I think people are expecting a better number based on the jobs number and wage growth,” he said.

The euro traded lower after hitting a three-week high above $1.13 on Wednesday, while the dollar fell to a two-week low against the yen after Bank of Japan Governor Haruhiko Kuroda said the real effective exchange rate showed the Japanese currency is “very weak”.

Read More Yen soars against dollar after Kuroda remarks

The only data of note out Wednesday, total weekly mortgage applications, showed an 8.4 percent jump on a seasonally adjusted basis as buyers rushed to get mortgages ahead of rising rates.

“Before the Fed meeting (next Tuesday and Wednesday) there’s a dearth of (market-moving) economic data,” said Adam Sarhan, CEO of Sarhan Capital. “Until we get to next Wednesday I think techincals are front and center.”

He’s watching for the S&P 500 to hold above yesterday’s low of 2,072 and close near or above its 50-day moving average.

“If (bulls) don’t show up today and buy the dip, when will they?” he said. “If we open higher and close lower, that’s a bad sign, no doubt about it.”

The Dow Jones industrial average hasn’t closed above the psychologically key level of 18,000 for the last four trading sessions. The S&P has held within a range between 2,070 and 2,130 since early May.

“A bounce is unfolding among global equity markets this morning in reaction to widespread short-term oversold conditions,” BTIG Chief Technical Strategist Katie Stockton said in a note. “This is a bullish development, but we would like to see a strong finish to the week to confirm oversold ‘buy’ signals.”

DJIA Dow Jones Industrial Average 18021.62 257.58 1.45%
S&P 500 S&P 500 Index 2105.70 25.55 1.23%
NASDAQ Nasdaq Composite Index 5078.33 64.46 1.29%

The Dow Jones Industrial Average traded up 252 points, or 1.42 percent, at 18,015, with Intel leading all blue chips higher.

The S&P 500 traded up 25 points, or 1.18 percent, at 2,104, with information technology leading all 10 sectors higher.

The Nasdaq traded up 62 points, or 1.25 percent, at 5,076.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 13.

About four stocks advanced for every decliner on the New York Stock Exchange, with an exchange volume of 266 million and a composite volume of nearly 1.3 billion as of 11:33 a.m.

Crude oil futures for July delivery pared gains to add 91 cents to $61.05 a barrel on the New York Mercantile Exchange. Gold futures for August delivery rose $10.40 to $1,188.00 an ounce in morning trade.

In corporate news,

Netflix surged 6 percent to a record after news its shareholders approved an increase in the company’s share authorization, the precursor to a stock split. There’s no indication yet for an exact ratio for the split.

Read More Early movers: TGT, PRU, CL, NFLX, AAPL, TSLA & more

Apple gained more than 1 percent despite reports its newly announced Apple Music service is facing antitrust scrutiny from the attorneys general of New York and Connecticut. The probe will center on Apple’s negotiations with music companies on its paid subscription service.

CNBC’s Peter Schacknow contributed to this report.

On tap this week:


Earnings: Box, Krispy Kreme, Men’s Wearhouse

1 p.m.: $21 billion 10-year auction

2 p.m.: Federal budget


Earnings: Restoration Hardware, Korn Ferry, Casey’s General, ExOne

8:30 a.m.: Initial jobless claims, retail sales, import prices

10 a.m.: Business inventories

10:30 a.m.: Natural gas inventories

1 p.m.: $13 billion 30-year bond auction


8:30 a.m.: PPI

10 a.m.: Consumer sentiment

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