U.S. stocks traded higher on Wednesday, recovering some of Tuesday’s sharp decline, as investors eyed Greece headlines amid continued rise in the dollar and bond yields.
The Dow Jones industrial average briefly gained more than 100 points soon after the open. The blue chip index fell as much as 242 points on Tuesday before closing 190 points lower.
“Improved sentiment in Europe is providing a boost to U.S. equities,” said John Lonski, chief economist at Moody’s. The German DAX gained more than 1 percent, while Greece’s ATHEX Composite traded 3.5 percent higher.
“That would lessen the perceived risk surrounding the Greek’s ability to make good on its debt payment obligations,” Lonski said.
Greek Prime Minister Tsipras said on Wednesday the negotiations are on the final stretch towards a positive deal.
The dollar reversed, with the euro gaining to $1.09. The yen remained near 8-year highs.
Marc Chandler, foreign exchange strategist at Brown Brothers Harriman, said the dollar moved on Greek headlines but he is still suspicious that much progress was made.
Treasury yields resumed their rise, with the 2-year near 0.65 percent and the 10-year at 2.15 percent.
“I think the market is going to catch its breath after yesterday’s tumble. The focus remains on the dollar and the yield curve,” said Peter Cardillo, chief market economist at Rockwell Global Capital.
No major data is expected Wednesday. Weekly mortgage applications dropped 1.6 percent as higher rates put a pause on refinancing.
Investors will continue to watch the Dow transports, which attempted to trade about half a percent higher. The index extended its recent selloff on Tuesday, with its 50-day moving average falling below its 200-day moving average.
‘There’s “nothing that suggests a correction in the transports is over and eventually the broader market will get hit,” Cardillo said. ” I think June is going to be a bit different from May—a tough month for stocks.”
The CBOE Volatility Index (.VIX), considered the best gauge of fear in the market, traded above 14. The index jumped 16.2 percent on Tuesday for its best daily move since January 28.
“The VIX was near year-to-date lows. When that happens, it becomes very skittish and very sensitive to any negative move,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab.
Stocks closed down more than 1 percent on Tuesday as investors weighed a strong dollar and mixed economic data that indicated the Fed could tighten sooner rather than later.
“This is the least-trusted bull market. At the first sign of weakness you see lots of people exit,” said Adam Sarhan, CEO of Sarhan Capital.
“If we open higher and close lower, that may be a subtle indication that the market isn’t ready to go higher,” he said.
U.S. Treasury Secretary Jack Lew attends the G7 meeting of finance ministers in Dresden on Thursday and Friday.
Ahead of the meeting, Lew told students at the London School of Economics that European negotiators must not miscalculate as they try to negotiate a debt deal with Greece’s government. uncertainty over the actual cost of a Greek exit from the euro zone should
The S&P 500 traded up 13 points, or 0.63 percent, at 2,117, with information technology leading all 10 sectors higher.
The Nasdaq traded up 38 points, or 0.76 percent, at 5,071.
About two stocks advanced for every decliners on the New York Stock Exchange, with an exchange volume of 98 million and a composite volume of 359 million in morning trade.
Crude oil futures fell 81 cents to $57.55 a barrel on the New York Mercantile Exchange. Gold futures fell $1.20 to $1,185.70 an ounce as of 9:57 a.m.
Earnings out before the open on Wednesday included Michael Kors, Costco, Tiffany, Toll Brothers, and Movado.
Tiffany earned 81 cents per share for its latest quarter, 11 cents above estimates, and revenue was also well above forecasts despite the negative effects of a strong dollar. The results follow a downbeat forecast given by Tiffany earlier this year.
Michael Kors fell one cent shy of estimates with quarterly profit of 90 cents per share, with revenue essentially in line. The company, however, reported its slowest sales growth in 3-1/2 years, and its full-year forecast, however, is below Street estimates.
Toll Brothers earned 37 cents per share for its latest quarter, two cents above estimates. The luxury home builder did see revenue come in below estimates as the number of homes sold fell two percent.
DSW reported quarterly profit of 53 cents per share, six cents above estimates, and revenue also was above analyst forecasts. The company’s results were led by a jump in athletic footwear sales, though it did see growth in all its major categories.
European stock markets traded higher Wednesday despite concerns over Greece’s deteriorating financial situation.
U.S. Federal Reserve Vice Chairman Stanley Fischer said Tuesday that markets should not be surprised by the timing or pace of rate hikes.
—CNBC’s Patti Domm and Peter Schacknow contributed to this report.