U.S. stocks have ended more than 1.5 percent higher Wednesday, helped by gains in oil prices, as global markets recovered for a second day from their post-Brexit plunge. "What I think people are grasping here is, this is a disaster for the U.K., but it's a big splash with small ripples," said David Kelly, chief global strategist at JPMorgan Funds. The Dow Jones industrial average closed up nearly 285 points in its best percentage gain since March 1, with Boeing and Goldman Sachs contributing the most to gains as all constituents except Home Depot rose. The Nasdaq composite outperformed with Microsoft up 2.2 percent and the iShares Nasdaq Biotechnology ETF (IBB) up more than 2 percent. U.S. crude oil futures settled up $2.03, or 4.24 percent, at $49.88 a barrel. Oil extended gains after EIA weekly crude inventories showed a greater-than-expected drawdown of 4.05 million barrels. Late Tuesday, the American Petroleum Institute reported a greater-than-expected drawdown of 3.9 million barrels. Gains in oil were also supported by expectations of near-term supply shortages. In Norway, oil workers threatened to strike, while in Venezuela oil producers and refiners struggled with power outages and equipment shortages. Energy and health care led all S&P 500 advancers as all sectors rose. The index closed up 1.7 percent and held above its 200-day moving average. With Wednesday's gains, both the Dow and S&P swung back into positive territory for 2016 as the major averages recovered more than half of their losses from the post Brexit sell-off. All three major indexes were pacing for weekly gains of more than 1.5 percent. The Dow transports closed 2.2 percent higher. "It's the end of the quarter so you do have some portfolio adjustment going on. ... Probably a net positive," said Art Hogan, chief market strategist at Wunderlich Securities. Thursday, the last day of June, marks the end of the second quarter. The U.S. dollar index was off half a percent, with the euro near $1.111 and the yen near 102.9 yen versus the greenback. Sterling rose further off recent 30-year lows to near $1.344. European stocks rose for a second-straight day, with the German DAX up more than 1.5 percent. The STOXX Europe 600 climbed 3 percent. "It will take a long time for Britain's relationship with the EU to be resolved, but it will take a short time for people to realize this is primarily Britain's problem," Kelly said. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, extended a recent drop to trade below 17. Asian stocks closed higher, with the Nikkei 225 up more than 1.5 percent and the Shanghai composite about two-thirds of a percent higher. In U.S. economic news, pending home sales fell a more-than-expected 3.7 percent in May from the prior month, for a 0.2 percent year-over-year decline and the first annual drop in two years. Treasury yields higher, with the 2-year yield near 0.63 percent and the 10-year yield around 1.51 percent. Earlier, the 30-year Treasury yield hit its lowest since February 2015, closing in on its record low set 17 months ago, as investors also loaded up on European and Japanese government bonds and sent their yields to historic lows, Reuters said. Consumer spending rose 0.4 percent in May. Personal income increased 0.2 percent. The Fed's preferred inflation measure of personal consumption expenditures (PCE) price ex-food and energy rose 0.2 percent last month, or 1.6 percent over the 12 months through May. In the first of Fed policymakers to comment since the Brexit vote, Federal Reserve Governor Jerome Powell said Tuesday in a Reuters report that Brexit could pose a new drag on the U.S. economy at a time when momentum in the U.S. job market may already by slowing. He also said the U.K. vote to leave had shifted global risks "to the downside" and potentially posed a new threat to the Fed's outlook. "The Fed is really erring on the side of caution because this is an unprecedented event," said Jeff Kravetz of the Private Client Reserve at U.S. Bank. U.S. stocks closed more than 1.5 percent higher Tuesday, lifted by gains in oil prices, as investors looked for bargains after the Brexit sell-off. Analysts also noted improved sentiment after initial fears of significant negative spillover from Brexit. The Dow Jones industrial average closed up 284.96 points, or 1.64 percent, at 17,694.68, Nike leading advancers and Home Depot the greatest decliner. The S&P 500 closed up 34.68 points, or 1.70 percent, at 2,070.77, with energy leading all 10 sectors higher. The Nasdaq composite closed up 87.38 points, or 1.86 percent, at 4,779.25. About six stocks advanced for every decline on the New York Stock Exchange, with an exchange volume of roughly 1 billion and a composite volume of 4.1 billion in the close. Gold futures for August delivery settled up $9.00 at $1,326.90 an ounce. Source: CNBC
