Energy buoys Wall Street after selloff, Syria eyed

Traders work on the floor of the New York Stock Exchange August 27, 2013.

Credit: Reuters/Brendan McDermid

By Rodrigo Campos

NEW YORK | Wed Aug 28, 2013 10:42am EDT

NEW YORK (Reuters) - Energy shares buoyed Wall Street on Wednesday as oil prices jumped after the United States and its allies appeared ready to attack Syria, raising concerns over global oil supplies.

Selling pressure abated on equities following stocks' worst day since June a day earlier amid heightened tensions over a possible Western response to an alleged chemical weapons attack on Syrian civilians by President Bashar al-Assad's government.

The S&P 500 index fell 2 percent in the past two days and the CBOE Volatility Index .VIX rose 20 percent, reflecting investor uncertainty.

Tuesday's selloff "may have been an over reaction to what we know now on Syria," said John Manley, chief equity strategist at Wells Fargo Funds Management in New York. However, he said, the consequences of any conflict are unknown and the selling could have only started.

The United Nations Security Council was set for a showdown on Wednesday after Britain sought authorization for Western military action against Syria that seems certain to be vetoed by Russia and probably China.

The Dow Jones industrial average .DJI rose 28.8 points or 0.19 percent, to 14,804.93, the S&P 500 .SPX gained 3.56 points or 0.22 percent, to 1,634.04 and the Nasdaq Composite .IXIC added 14.088 points or 0.39 percent, to 3,592.612.

Brent crude hit a six-month high and U.S. crude hit its highest in more than two years on concerns foreign military action in Syria may further destabilize the Middle East.

The S&P energy index .SPNY rose 1.3 percent to lead the top ten S&P sectors. Chevron (CVX.N), up 2 percent at $121.25, and Exxon Mobil (XOM.N), up 1.3 percent at $87.93, were the top performers on the S&P 500.

An index of airline shares .XAL fell 0.7 percent after falling 3.9 percent on Tuesday.

Analysts said a possible decline in consumer confidence and spending, due to higher oil prices and the possibility of a larger conflict, was affecting U.S. equities.

Gold prices rose to 3-1/2 month highs above $1,430 an ounce as the Syria tensions raised its appeal as a safe-haven asset.

On Wall Street, U.S. government housing finance authorities are pressing JPMorgan Chase & Co (JPM.N) for at least $6 billion to settle lawsuits over bonds backed by subprime mortgages, according to a person familiar with the matter. JPMorgan shares fell 0.5 percent to $50.36.

Shares of mining equipment manufacturer Joy Global (JOY.N) fell 5.6 percent to $48.45 after it reported a lower profit for the third quarter and said orders fell.

Contracts to purchase previously owned U.S. homes fell for the second straight month in July, a sign that rising mortgage rates are taking some steam out of America's housing market recovery.

The PHLX housing sector index .HGX fell 0.6 percent.

(Editing by Bernadette Baum)

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