NEW YORK — Wall Street rebounded Thursday, rising sharply as oil prices fell and investors took advantage of bargains in financial stocks after two straight days of heavy declines.
Crude backtracked as traders who sent oil soaring Wednesday in response to declining gasoline supplies realized that demand for fuel is still falling. Light, sweet crude fell 99 cents to settle at $115.01 a barrel on the New York Mercantile Exchange. The pullback helped reassure stock traders who are concerned that rising oil and gas prices would force consumers to keep paring back their spending.
Stocks initially fell after the Labor Department reported another hefty jump in consumer prices. The 0.8 percent overall rise in July’s Consumer Price Index was not as large as June’s increase, but it was twice as high as the market expected and brings inflation to its highest annual pace in 17 years. The core index, which eliminates food and energy prices, is not up as much, but it still rose by 0.3 percent last month — slightly more than forecast.
The market turned higher as investors began looking more positively at stock prices that were beaten down the past two sessions amid rising anxiety about credit losses at banks and brokerages.
“The greater fear right now is missing the next big rally,” said Richard Dickson, senior analyst at Lowry Research in Florida. “Inflation numbers were bad, but they are probably going to get better. The fact that the market has not sold off with any strength, investors are saying, ‘Hey, let’s go ahead and buy.’ ”
The Dow Jones industrial average rose 82.97, or 0.72 percent, to close at 11,615.93, after rising more than 180 points earlier. It lost a total of nearly 250 points Tuesday and Wednesday.
The Standard & Poor’s 500 rose 7.10, or 0.55 percent, to 1,292.93, and the Nasdaq rose 25.05, or 1.03 percent, to 2,453.67.
New York Stock Exchange consolidated volume came to 3.99 billion shares, down from Wednesday’s 4.68 billion. Advancing issues outnumbered decliners by about 2 to 1 on the NYSE and about 3 to 2 on the Nasdaq.
Bonds rose higher after the Labor Department’s data, in late trading. The yield on the benchmark 10-year Treasury note, which moves opposite its price, dipped to 3.90 percent from 3.94 percent late Wednesday.
With oil prices falling since mid-July, investors have grown optimistic and are looking ahead, anticipating that August’s economic data will reflect this decline.
“There has been a sufficient amount of pessimism to warrant a short-term rally,” said Chris Johnson, chief executive and chief investment strategist at Johnson Research. “Money is on the sideline waiting to move in.”
