Stocks rally ending a three-day losing streak

Dow Jones: 12,394.66 (+38.45.) Nasdaq: 2,761.38 (+15.22) SP 500: 1,320.47 (+4.19): US STOCKS ended a three-day losing streak on yesterday as recent underperformers led a thinly traded rally that wasn't seen as strong enough to overcome worries about waning global demand.

The SP500 hit its lowest intraday level since April 19th on Tuesday, and recent weak breadth suggested selling had gone too far for now. Energy and materials shares, which have lived and died by hopes for robust global recovery, returned to their winning ways.

Energy shares gained on an unexpected drop in distillate stockpiles, which boosted heating oil futures. The SP energy index advanced 1.5 per cent, by far the biggest percentage gainer among SP 500 sectors. Dow component Exxon Mobil rose 0.8 per cent to $81.96 as the PHLX oil service sector index added 2.8 per cent.

Bespoke Investment Group said breadth in the SP 500 was very close to extremely oversold levels and that it was a buying opportunity in March, which was the last time those levels were reached.

Despite that, further upside was seen as limited, given headwinds from Europe and the prospect of an environment without supportive monetary policy.

The SP material and industrial sectors indexes each rose about 1 percent following a period of weakness for the groups.

The Dow Jones gained 38.45 points, or 0.31 per cent, to end at 12,394.66.

The SPs 500 Index advanced 4.19 points, or 0.32 per cent, to 1,320.47. The Nasdaq Composite Index rose 15.22 points, or 0.55 per cent, to 2,761.38.

Flextronics International Ltd contributed to the larger gains in the Nasdaq, rising 3.8 per cent to $7.04 following an upgrade from Raymond James. Homebuilders shares also advanced after luxury builder Toll Brothers said orders rose in the latest quarter as low home prices induced its target market of the affluent to start buying again. The stock climbed 1.8 per cent to $20.63.

American International Group slumped 4 per cent to $28.28, below the $29 offer price of the 300 million shares being sold by the U.S. Treasury and the bailed-out insurance company.

More than 60 per cent of stocks traded on both the New York Stock Exchange and the Nasdaq ended in positive territory. – (Reuters)