NEW YORK (Reuters) - U.S. stocks ended higher on Wednesday, and the S&P 500 and Dow registered their biggest daily percentage gains since May 4, on signs of easing political turmoil in Italy and as a surge in oil prices boosted energy stocks.
The S&P 500’s gains erased the losses of Tuesday, when the index posted its first 1 percent drop in May. Fears about instability in Italy and the possibility of the country’s exit from the euro sent investors piling into safety assets on Tuesday. The U.S. Treasury market, on a total return basis, on Tuesday had its best day since at least July 2011, according to the Bloomberg Barclay’s Treasury Aggregate Index.
Stocks reversed Tuesday’s slide as Italy’s 5-Star Movement made a renewed attempt to form a coalition government and called for euroskeptic Paolo Savona to withdraw his candidacy as economy minister.
The Italian government’s successful auction of five- and 10-year bonds also assuaged concerns about the country’s ability to finance itself after a sell-off in bonds on Tuesday resulted in the biggest one-day surge for two-year yields in 26 years.
Energy stocks .SPNY posted the biggest gains of the 11 major sectors of the S&P 500. The energy index rose 3.1 percent, its biggest one-day gain in seven weeks, as U.S. crude oil prices settled up 2.2 percent.
“The risk of Italy leaving the euro is remote,” said Kate Warne, investment strategist at Edward Jones in St. Louis. “It’s a source of volatility but not a source of true concern for the financial markets.”
The Dow Jones Industrial Average .DJI
