NEW YORK — Wall Street shot higher Tuesday, gaining back the previous session’s sharp losses and then some, after a drop in oil prices and a rise in consumer confidence gave investors some hope for a letup in Americans’ financial woes. The Dow Jones industrial average rose 266 points.
Crude-oil prices sank $2.54 to $122.19 a barrel on the New York Mercantile Exchange, extending their two-week-long retreat from a record high above $147. The prospect of lower energy costs for U.S. consumers, along with a modest uptick in the Conference Board’s July index of consumer confidence to 51.9 from 51 in June, came as welcome news. Consumer spending accounts for more than two-thirds of U.S. economic activity.
“The thinking is that oil prices are heading lower, and that’s obviously a positive for the market,” said Richard Cripps, chief market strategist for Stifel Nicolaus.
A stock bounce was hardly unexpected, though, after the Dow lost nearly 240 points Monday on worries about the sagging financial sector. Wall Street is torn: Energy prices, if they continue on their downward path, could provide big relief to consumers and in turn help the economy, but credit losses keep mounting at the nation’s major banks. The result is big swings in the market but little consistent direction.
“We’re living from one piece of news to the next,” said Alan Gayle, senior investment strategist for RidgeWorth Capital Management. The market’s volatility is likely to continue unless it gets further evidence that oil prices are, indeed, on their way down and that banks have already seen the bulk of their losses.
The Dow gained 266.48, or 2.39 percent, to 11,397.56.
Broader stock indicators also climbed. The Standard & Poor’s 500 index rose 28.83, or 2.34 percent, to 1,263.20, and the Nasdaq composite index rose 55.40, or 2.45 percent, to 2,319.62.
The Dow and the S&P are now less than 20 percent below their Oct. 9 record peaks — technically out of bear-market territory. The Nasdaq is less than 19 percent below its Oct. 31 peak.
