(Reuters) - U.S. stocks rose on Wednesday, with a surge in energy stocks helping Wall Street recover from a steep selloff in the previous session that was driven by political turmoil in Italy.
Hopes that Italy might avoid a potentially damaging general election set the markets off to a strong start on Wednesday.
At the session's peak, the S&P 500 .SPX erased all its losses from Tuesday on news that Italy's 5-Star Movement party called for eurosceptic economist Paola Savona to withdraw his candidacy as economy minister to the possible formation of a government.
“The extent that it sold off was probably a little too much. So a little bit of a bounce back is not that big a surprise,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
Fears about the political instability had sent investors scurrying to safety assets on Tuesday, with the U.S. Treasury market enjoying its best day in at least about seven years. However, stocks took a beating, with the S&P 500 posting its first 1 percent drop in May.
At 13:13 p.m. EDT the Dow Jones Industrial Average .DJI was up 286.48 points, or 1.18 percent, at 24,647.93, the S&P 500 .SPX was up 32.91 points, or 1.22 percent, at 2,722.77 and the Nasdaq Composite .IXIC was up 61.05 points, or 0.83 percent, at 7,457.65.
Traders also said the political uncertainty in Italy also led to a drop in the expectations for U.S. interest rate hikes for the year, helping the stock markets gain
