Stocks soar on drop in oil, Wells Fargo report

NEW YORK — Wall Street — at least for the moment — shrugged off some of its many concerns Wednesday and bounded higher thanks to a drop in oil prices. The Dow Jones industrial average rose 276 points, or 2.5 percent, posting its best daily gain since April.

The broader Standard & Poor's 500 index also gained 2.5 percent, while the technology-dominated Nasdaq composite index surged 3.1 percent. Investors exited government bonds and back into stocks as it appeared that the slowing economy will curtail demand for fuel and, in turn, energy costs.

Light, sweet crude fell $4.14 to settle at $134.60 a barrel on the New York Mercantile Exchange, compounding a drop of $6.44 on Tuesday.

In addition to sinking oil prices, investors found relief in a decision by Wells Fargo & Co. to boost its dividend that helped counter some of the market's concerns about the health of banks. The San Francisco-based bank's move to raise its payout, along with its tamer-than-expected profit decline, was seen as a bullish sign for the troubled sector.

Still, the Labor Department's report that consumer prices shot up in June at the second fastest pace in 26 years reminded investors that inflation still poses a threat to economic growth.

And Wall Street remains uncertain about the economy and specifically the financial sector. This week has brought fresh attention to potential trouble spots in the mortgage market. Fannie Mae and Freddie Mac, the government-chartered mortgage financiers, are still a concern, as are regional banks that could have bad mortgage debt on their books.

But, for the moment, investors were pleased by the drop in oil from record levels.

"I think the pullback in oil is significant. The market and the market participants clearly had digested what the impact was going to be if oil prices had stayed at that level," said Dan Genter, president and chief investment officer of RNC Genter in Los Angeles.

According to preliminary calculations, the Dow rose 276.74, or 2.52 percent, to 11,239.28. It was the blue-chips' biggest one-day gain since April 1, when the index rose 391 points.

On Tuesday, stocks ended mostly lower on continuing worries about the financial sector; the Dow logged its first close below 11,000 since July 2006.

Broader stock indicators also rose Wednesday after fluctuating in the early going. The S&P 500 index advanced 30.45, or 2.51 percent, to 1,245.36, and the Nasdaq rose 69.14, or 3.12 percent, to 2,284.85.