Wall Street gains following snap back in commodities
Stocks rose on Monday as commodity-related shares rebounded, but worries remained over how much further the recent rally may continue.
Last week a massive sell-off in materials and oil forced investors out of high-risk assets, and stocks ended with weekly losses of about 1 percent.
The energy and materials sectors were the best performers on the S&P 500 as the Reuters/Jefferies commodities index <.CRB> jumped 1.8 percent. The S&P energy index <.GSPE> was up 1.7 percent.
Last week's exit from commodities, along with the near-end of first-quarter earnings reports and the Federal Reserve's bond-buying program has fueled speculation that the stock market's eight-month rally will slow.
With the ongoing priming of the U.S. economy by the Federal Reserve, there surely should be some concern over corporate earnings in the aftermath of its last bond purchase in June, said Andrew Wilkinson, senior market analyst at Interactive Brokers Group in Greenwich, Connecticut.
Corporate earnings are OK at this point, but going forward it could be a long, hot summer for stocks. If we continue to see the commodity markets trading with a heavy heart, the outlook for stocks could quite easily weaken.
Among other worries facing stock investors, Standard & Poor's downgraded Greece's rating into junk territory on doubts Athens can manage its debt without imposing losses on private bondholders.
At 3 p.m. ET, the Dow Jones industrial average <.DJI> was up 55.25 points, or 0.44 percent, at 12,693.99. The Standard & Poor's 500 Index <.SPX> was up 6.54 points, or 0.49 percent, at 1,346.74. The Nasdaq Composite Index <.IXIC> was up 16.51 points, or 0.58 percent, at 2,844.07.
The iShares Silver Trust exchange-traded fund
If (the silver ETF) can hold on to most of today's gain, a move to $38 would be targeted, Stifel Nicolaus options market strategist Elliot Spar said in a note. There lies the 50-day moving average and the gap from last Thursday.
On the S&P 500, 1,340 and 1,333 are key levels that should provide strong support and entice buyers, according to Ryan Detrick, senior technical strategist at Schaeffer's Investment Research.
Despite last week's losses, the S&P 500 held above important technical levels, with the week's low just below 1,330 and Friday's close above 1,340.
Commodities, stocks and the euro have traded in a similar pattern in recent months as low U.S. interest rates have boosted risk appetite.
In the financial sector, Citigroup Inc
A group of mortgage bond investors is reaching out for help in a novel bid to force H&R Block Inc's defunct subprime lending unit to buy back billions of dollars in soured home loans, the group's lawyer said on Monday. Shares of H&R Block
(Additional reporting by Angela Moon and Doris Frankel)
(Reporting by Caroline Valetkevitch; Editing by Dan Grebler)
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