Stocks stage a late-day turnaround, helped by weaker dollar
NEW YORK (AP) — U.S. stocks staged a rapid comeback in late-afternoon trading Wednesday, helped by a surge in the price of oil and a decline in the U.S. dollar. Chipotle Mexican Grill fell sharply as the company disclosed a federal investigation into its E. coli outbreak, and Yahoo sank as the troubled Internet company announced layoffs and plans to sell businesses.
KEEPING SCORE: The Dow Jones industrial average rose 183 points, or 1.1 percent, to 16,336 as of 3:30 p.m. Eastern. The Standard & Poor's 500 index rose eight points, or 0.4 percent, to 1,911 and the Nasdaq composite fell 11 points, or 0.3 percent, to 4,504.
A FISTFUL OF (WEAKENED) DOLLARS: A sharp decline in the dollar against the major other currencies was helping the market to rebound. The U.S. dollar index was down 1.5 percent, a large move for the foreign exchange market, with nearly that entire decline happening in afternoon trading. Many U.S. companies have been complaining that the appreciation of the dollar was eroding their earnings by making U.S. exports less profitable.
A weaker dollar also tends to send commodity prices higher. That was a relief to investors as well since a plunge in the price of crude oil has been decimating profits at energy companies.
The price of U.S. crude oil jumped $2.40, or 8 percent, to close at $32.28 a barrel, which helped lift up energy stocks. Metals like gold, silver and copper all rose more than 1 percent.
SAFETY: Investors are still putting money into traditional safe-havens: stocks that pay high dividends, U.S. government bonds, and precious metals.
The Dow Jones utility index, a basket of 15 utility companies, rose 1.4 percent. That index is up more than 8 percent this year. Utilities and other companies that pay large dividends are popular at times of uncertainty because they provide a regular return and are large, mature businesses that tend to stand up well during economic downturns.
Some traders are taking that a step further.
"I've been telling clients to be in all cash," said Ian Winer, co-head of equities trading at Wedbush Securities. "There's too much credit risk out there, S&P 500 earnings could be down this year and it seems an increasing possibility that the U.S. could be in a recession in 2017."
CUTBACKS: Yahoo slumped $1.91, or 6.6 percent, to $27.15 after the company announced late Tuesday it would cut 1,700 jobs and sell some of the company's struggling businesses.
ON A DIET: Chipotle fell $20.40, or 4 percent, to $455.20 after the company said the E. coli outbreak at its stores hurt sales more than anticipated. Chipotle also disclosed it was now under investigation by Federal regulators over the outbreak.
CURRENCIES: The euro rose against the dollar to $1.1151, the dollar fell against the Japanese yen to 117.14 yen, and the dollar fell against the British pound to $1.4641.