World stock indexes rose on Wednesday with a rebound in biotechnology shares boosting US equities, while oil prices snapped a three-day rally after US data showed a large inventory build.
The S&P 500 hit its highest in three weeks, but concerns over corporate earnings just ahead of the US third-quarter reporting season kept the trading choppy. Reduced profit forecasts from Adobe Systems and Yum Brands late Tuesday added to gloom about the earnings picture.
Oil prices struggled to extend their recent rally as US government data showed domestic crude inventories rose 3.1 million barrels last week, more than forecast.
The US dollar rose against the euro and the Swiss franc, while the yen gained against the dollar after the Bank of Japan left monetary policy unchanged. The dollar was last down 0.24 per cent against the yen at 119.950 yen.
BOJ policy stimulus
Although the Bank of Japan held off on expanding stimulus on Wednesday, expectations are growing of more support rather than less as worries mount over a global economic slowdown. This week, the International Monetary Fund again cut its global growth forecast.
The potential for more stimulus from the European Central Bank and the Bank of Japan has contributed to a backdrop of accommodative central bank policy, along with expectations that a Federal Reserve rate increase will remain on hold until 2016.
On Wall Street, the S&P 500 healthcare index was up 1.5 per cent, in the biggest boost to the S&P 500, while the Nasdaq Biotech Index climbed 2 per cent after recent steep losses.
"On days where investors are looking for fallen angels, healthcare helps fill that equation today," said Art Hogan, chief market strategist at Wunderlich Securities in New York. "What was a drag over the past few days is now the leader."
US stocks
The Dow Jones industrial average rose 122.1 points or 0.73 per cent to 16,912.29, the S&P 500 gained 15.91 points or 0.8 per cent to 1,995.83 and the Nasdaq Composite added 42.79 points or 0.9 per cent to 4,791.15.
Energy and materials shares also rose, extending recent gains. On the downside, shares of Adobe fell 5.3 per cent to $80.65 while Yum Brands slumped 18.8 per cent to $67.71.
Analysts have been cutting estimates for US third-quarter earnings since the start of the quarter, and results now are forecast to have declined 4.4 per cent from a year earlier, Thomson Reuters data showed.
But even as Citi strategists have warned that analyst earnings forecasts are too optimistic, they have backed the view that the bull market has yet to die, predicting global equities will rise 20 per cent through the end of 2016. The market is "already pricing in" a gloomier scenario, they argued.
European, Asian shares
The pan-European FTSEurofirst 300 closed up 0.1 per cent, while MSCI's all-country world stock index was up 1 per cent.
Brent, the global crude oil benchmark, settled a volatile session down 59 cents at $51.33 a barrel. US crude slid 72 cents to settle at $47.81.
Crude oil
Brent and WTI had gained around 8 per cent or about $4, over the past three days, breaking above a month-long trading range.
US Treasuries
US Treasuries prices fell, with benchmark yields hitting their highest in a week as a recovery in global stock markets and bets on more stimulus from foreign central banks pushed investors away from bonds.
Benchmark 10-year Treasuries were down 10/32 in price to yield 2.070 per cent, up 3.5 basis points from late Tuesday. Earlier, the 10-year yield hit a one-week high of 2.086 per cent.