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Stocks rebound as anxiety over ‘Brexit’ eases

The facade of the New York Stock Exchange.
(Richard Drew / Associated Press)
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U.S. stock indexes mounted a broad comeback Tuesday as investors set aside their anxiety over Britain’s vote to leave the European Union and snapped up shares after a two-day rout.

Encouraging data on the U.S. economy and housing market helped put traders in a buying mood. The broad rally followed even bigger gains in Europe, which also bounced back from the steep losses triggered by Britain’s “leave” vote Thursday.

Oil and gas companies led the rally as energy prices rose. Banks and other financial companies, which took the heaviest losses in the sell-off, also surged. Healthcare, consumer and technology stocks also notched gains. Bond prices fell, sending yields higher.

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“We were due for a bounce heading into the morning; we had a couple of tough days there,” said Sean Lynch, co-head of global equity strategy at Wells Fargo Investment Institute. “Investors are stepping up and seeing some areas that may have been oversold the past couple of days and redeploying some of their cash.”

The Dow Jones industrial average advanced 269.48 points, or 1.6%, to 17,409.72. The Standard & Poor’s 500 index rose 35.55 points, or 1.8%, to 2,036.09. The Nasdaq composite climbed 97.42 points, or 2.1%, to 4,691.87.

Despite the rebound, the three indexes remain on track to end June in the red. They’re also down for the year.

European benchmarks had an even better day than U.S. indexes. Britain’s FTSE 100 and France’s CAC 40 each gained 2.6%. Germany’s DAX advanced 1.9%.

The euro and the British pound recovered somewhat, though the pound remained near the 30-year lows it reached immediately following the “Brexit” vote.

Uncertainty and anxiety over the economic fallout from the vote had roiled global financial markets since Friday and prompted ratings companies to slash their top-shelf credit ratings for Britain.

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Investors appeared to shake off some of their jitters Tuesday. British Prime Minister David Cameron signaled he might not trigger a clause setting in motion the exit from the EU before October.

In the U.S., investors got a batch of encouraging economic data to consider.

The Commerce Department raised its estimate of U.S. economic growth in the first three months of the year. Separately, a key gauge showed that U.S. home prices climbed in April, hitting record highs in several cities. In addition, the Conference Board said its measure of U.S. consumer confidence increased this month to the highest level since October.

“Obviously, the market isn’t very receptive to uncertainty, but in some ways this uncertainty is providing the possibility and the consideration that what happened in the U.K. isn’t necessarily reflective of, or an indicator of, a recession, especially here in the U.S., as well as globally,” said W. Janet Dougherty, a global investment specialist at J.P. Morgan Private Bank.

Pharmaceutical company Endo International surged 18.3% to $16.19, the biggest gainer in the S&P 500 index.

Some California companies also made big moves.

Xencor vaulted 32.1% to $16.56 after the Woodland Hills drugmaker announced a partnership with Novartis to develop two cancer drugs.

ReachLocal soared 170% to $4.56 after USA Today publisher Gannett said it would buy the Woodland Hills digital marketing company for $4.60 a share, or $138.4 million. Gannett shares fell 2% to $13.35.

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Regulus Therapeutics sank 49% to $2.54 after regulators put the San Diego company’s experimental hepatitis C drug on hold after two patients were diagnosed with jaundice.

Several energy companies notched gains.

Southwestern Energy jumped 11.8% to $13.89, and Devon Energy advanced 6.6% to $35.99. Cabot Oil & Gas climbed 8% to $25.99.

Earlier in Asia, markets bounced back from early losses as leaders signaled they were ready to step in with support policies. Japan’s benchmark Nikkei 225 index edged up 0.1%. South Korea’s Kospi advanced 0.5%.

Hong Kong’s Hang Seng Index lagged, losing 0.3%. It was dragged down by companies with high exposure to Europe, such as billionaire tycoon’s Li Ka-shing’s CK Hutchison Holdings, which has British retail, ports and telecom investments and fell 1.7%.

In currency markets, the pound recovered to $1.3343 from $1.3176. The yen eased slightly against the dollar, though it was still hovering near its strongest level in two years. The dollar rose to 102.79 yen from 101.97 yen. The euro strengthened to $1.1049 from $1.1005.

Benchmark U.S. crude rose $1.52, or 3.3%, to $47.85 a barrel in New York. Brent crude, used to price international oils, climbed $1.42, or 3%, to $48.58 a barrel in London.

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Wholesale gasoline rose 3 cents to $1.51 a gallon. Heating oil rose 4 cents to $1.47 a gallon. Natural gas jumped 20 cents, or 7.4%, to $2.92 per 1,000 cubic feet.

Bond prices fell. The yield on the 10-year Treasury note rose to 1.46% from 1.44%.

Gold fell $6.80 to $1,317.90 an ounce, silver rose 10 cents to $17.89 an ounce and copper advanced 5 cents to $2.18 a pound.


UPDATES:

2:13 p.m.: This article was updated with additional information.

1:13 p.m.: This article was updated with closing prices.

This article was originally published at 6:52 a.m.

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