Watch CBSN Live

Stocks climb after yesterday's big decline

(AP) NEW YORK - Stocks made a U-turn on Wednesday, climbing sharply a day after their worst loss of the year.

The Dow Jones industrial average was up 98 points to 12,813 in the first half-hour of trading, erasing nearly half of Tuesday's 214-point loss. The broader Standard & Poor's 500 rose 13 points to 1,371. The Nasdaq composite index re-crossed the closely watched 3,000 mark, rising 26 points to 3,017.

The broad gains came after the Dow and S&P 500 fell for five days straight, their longest losing streaks of the year. Most European markets also rose. The dollar and Treasury prices fell.

Investors had been unnerved earlier in the week over concerns about Spain's economic health and fears of weak earnings growth in the U.S. But Tuesday night, they went to bed reassured by a much-better-than-expected earnings report from Alcoa, the aluminum producer that generally kicks off the U.S. corporate earnings season. Wednesday morning, they woke up to news that Europe had not imploded and that borrowing costs in volatile Spain and Italy had edged down.

Spanish markets take breather after sharp losses
Stocks extend longest slump this year

Spain's borrowing rate on its 10-year bonds dropped back to 5.87 percent, down from Tuesday's four-month high of 5.93 percent. That's still dangerously close to the 7 percent that is usually considered the point at which a country can longer afford to borrow money.

There were other signs that problems in Europe are still hibernating rather than solved. Italy sold 12-month bonds but was forced to pay more than double the interest rate compared to last month, a concession to investors who are nervous about Europe's health. Even Germany, whose bonds are considered a much safer investment, struggled in its own debt sale. Germany failed to sell all the 10-year bonds that it intended to on the open market.

Upcoming elections in Greece and France also threaten to unravel some of the uneasy peace that has been reached between the weak and the strong countries in Europe. Opposition candidates have promised they won't go along so easily with the European deals that have been hammered out calling for weaker countries like Greece to cut spending if they are to continue to get rescue funds. Uncertainty in Greece went to a new level Wednesday when the country announced it will hold parliamentary elections months ahead of schedule.

The market has had a rough start to the second quarter, and Europe's debt crisis and an expected slowdown in U.S. earnings aren't the only problems. There are also signs that jobs growth is slowing and that the Federal Reserve is disinclined to pump more money into the economy. Some of the sell-off is also probably from investors trying to get out of the market now with their first-quarter gains still intact. If the Dow closes higher today, it will be the first time since April 2 and only the second gain since the second quarter began.

Investors remain concerned that high gas prices could rekindle a recession, forcing companies to raise prices and crimping household budgets.

Oil prices inched up toward $102 per barrel Wednesday on the New York Mercantile Exchange, reversing Tuesday's decline. Though they're down from the nearly $110 per barrel reached last month, they're still above October's price of $75.

The rising prices are partly because of international tension over Iran's nuclear program, with new talks scheduled to begin Saturday. Iran, which has already cut off shipments to several European countries, said Wednesday it had stopped shipping to Germany.

Among stocks making big moves:

- Alcoa rose 8 percent after handily beating analysts' expectations for the quarter and turning a profit. The stock had fallen nearly 3 percent the day before as investors bet that the company would lose money.

- Avon rose nearly 3 percent, two days after naming a new CEO that it hopes will turn around a company plagued by bribery allegations and an unwanted takeover bid.

- Owens-Illinois Inc., which makes glass containers for the food and beverage industries, jumped 10 percent. The company said it expects its earnings per share to surge 35 percent because of more productive manufacturing methods and cost cuts.