Wall Street ends higher, buoyed by drop in oil

NEW YORK -- Wall Street rebounded Thursday, rising sharply as oil prices fell and investors took advantage of bargains in financial stocks after two straight days of heavy declines.

Crude backtracked as traders who sent oil higher Wednesday in response to declining gasoline supplies realized that demand for fuel is still falling. Light, sweet crude fell 99 cents to settle at to $115.01 a barrel on the New York Mercantile Exchange. The pullback helped reassure stock traders who are concerned that rising oil and gas prices would force consumers to keep paring back their spending, which accounts for more than two-thirds of economic growth.

Stocks initially fell after the Labor Department reported another hefty jump in consumer prices. The 0.8 percent overall rise in July's Consumer Price Index was not as large as June's increase, but it was twice as high as the market expected, and brings inflation to its highest annual pace in 17 years. The core index, which eliminates food and energy prices, is not up as much, but it still rose by 0.3 percent last month -- slightly more than forecast.

The market turned higher as investors began looking more positively at stock prices that were beaten down the past two sessions amid rising anxiety about credit losses at banks and brokerages.

"The greater fear right now is missing the next big rally," said Richard Dickson, senior analyst at Lowry Research in Florida. "Inflation numbers were bad, but they are probably going to get better. The fact that the market has not sold off with any strength, investors are saying, 'Hey, let's go ahead and buy.'"

Still, investors found it hard to hold to their enthusiasm, and the market came off its highs as some uncertainty about financials crept back into the market.

"(Investors) have different opinions as to what the value of those companies are given the tremendous difficulties they face," said Kevin Dorwin, a principal with San Francisco-based Bingham, Osborn & Scarborough.

According to preliminary calculations, the Dow rose 82.97, or 0.72 percent, to close at 11,615.93, after rising more than 180 points earlier in the day. It lost a total of nearly 250 points on Tuesday and Wednesday.

The Standard & Poor's 500 index rose 7.10, or 0.55 percent, to 1,292.93, and the Nasdaq composite index rose 25.05, or 1.03 percent, to 2,453.67.