By Corrie Driebusch and Stephanie Yang
U.S. stocks rose Wednesday, as major benchmarks recovered ground
one day after their biggest losses in weeks.
The Dow Jones Industrial Average gained 121 points, or 0.7%, to
18162, rebounding from a tumble of 1% on Tuesday, its biggest
one-day rout since April 30.
The S&P 500 added 16 points, or 0.8%, to 2121, while the
Nasdaq Composite Index gained 56 points, or 1.1%, to 5089. Both
benchmarks sustained their sharpest loss since May 5 on
Tuesday.
Information technology stocks, which sustained some of the
biggest losses Tuesday, pulled ahead. Technology stocks in the
S&P 500 rose 1.2%.
Tuesday's selloff marked a sharp divergence from recent
stock-trading sessions. Last week both the Dow industrials and the
S&P 500 hit fresh record highs despite anemic trading volume.
On Tuesday volumes picked up but remained below average.
Investors blamed Tuesday's rout in part on mixed economic data.
Some data indicated that the U.S. economy may be improving after
hitting a soft patch in the first quarter. Though that is good news
for the economy, it helps solidify expectations for a Federal Rate
increase later this year, which some investors worry may hurt stock
performance.
"There is the marginal buyer who thinks there will not be a rate
increase in 2015 who periodically gets spooked, and that's what we
saw yesterday," said Tim Knepp, chief wealth officer for LPL
Financial.
As trading for the month of May winds down this week, investors
will have even more data to focus on, including Friday's revised
reading of first-quarter gross domestic product.
The initial reading of first-quarter GDP showed the U.S. economy
slowed dramatically, growing at a sluggish 0.2%. Economists
surveyed by The Wall Street Journal expect that to be revised
downward to a 1% contraction in Friday's revised reading.
Stocks were weighed down Tuesday by shares of small companies,
which are typically more sensitive to the U.S. economy. On
Wednesday, the Russell 2000 small-cap index gained 1%.
Investors will also continue to eye developments in Greece
around its approaching debt payments this week, something that
helped lead U.S. stocks lower on Tuesday, according to traders.
Greece and its creditors started to draft a final agreement on
Wednesday, sending European stocks higher. However, The Wall Street
Journal reported that one European Union official is doubtful of
Greece's ability to close a deal quickly. Germany's DAX gained 1.3%
and France's CAC 40 added 2%.
"Greece is an underlying issue, but it's not the main issue,"
said Jeffrey Yu, head of single-stock derivatives trading at UBS
AG, adding that investors are still more focused on the U.S.
economic data.
Heading into the summer months, volatility, which had been weak
throughout the past week, could pick up, some traders say. With
fewer investors buying and selling shares in the summer months,
swings in the market could be more exaggerated.
"The summer is always tricky because we lose trading volume,"
said Jennifer Ellison, principal at San Francisco-based wealth
management firm Bingham Osborn & Scarborough, which manages
about $3.5 billion. "You can have stronger reactions to what's
going on in the market. It's hard to predict what will happen."
In commodity markets, gold futures slipped 0.1% to $1185.50 an
ounce. Crude-oil futures fell 0.7% to $57.64 a barrel. The yield on
the 10-year Treasury note was at 2.157%, compared with 2.135% on
Tuesday. Yields fall as prices rise.
In corporate news, Michael Kors Holdings Ltd. shares tumbled 23%
after the retailer reported falling sales from a drop in tourist
spending and the company's watch business. Fossil Group Inc., which
makes watches for Michael Kors and other fashion brands, also fell
6%.
Tiffany & Co.'s shares jumped 12% after the jeweler reported
earnings and revenue fell less than expected in its first quarter
as a key sales metric grew across nearly every region, despite the
effect of a strong U.S. dollar.
Write to Corrie Driebusch at corrie.driebusch@wsj.com