Stock market continues its wild roller-coaster ride

A sharp reduction in oil inventories sent oil prices and the market higher.

NEW YORK (AP) — The stock market extended a streak of erratic trading Wednesday, rebounding from early losses and rising moderately after a drop in oil inventories lifted hopes for an economic recovery.

The day, which began with a sharp loss driven by a big drop in China’s biggest stock market, followed a trading pattern seen in markets around the world this week. Stocks have alternately advanced and retreated as investors shuttle between worries about the economy’s challenges, namely consumer spending and high unemployment, and nascent signs of healing.

While the surprising decline in crude inventories was a reassuring sign, there is still plenty of caution among investors. Although stocks recovered, Treasury prices held on to most of their gains. Government debt is a safe-haven investment in a struggling economy.

News from the Energy Department that the nation’s oil inventory fell by more than 8 million barrels in the past week sent oil prices and then stocks higher, as investors bet that the drop in stockpiles is an indication that energy demand is rising, and the economy is indeed improving.

Stocks’ sharp turn shows just how sensitive investors are to the latest bits of news, hungry for any sign that the economy is indeed healing and that the more than 40 percent surge in stocks since March has been warranted.

Analysts say the financial markets are likely to bounce around in the near term as investors try to reconcile their hopes for an economic recovery with the reality that it might not come as fast or be as strong as many people expected.

According to preliminary calculations, the Dow Jones industrials rose 61.22, or 0.7 percent, to 9,279.16. The Standard & Poor’s 500 index rose 6.79, or 0.7 percent, to 996.46, while the Nasdaq composite index rose 13.32, or 0.7 percent, to 1,969.24.

About three stocks rose for every two that fell on the New York Stock Exchange, where volume came to a light 988.3 million shares.

In earnings news, Deere & Co., the world’s largest maker of farm equipment, reported a 27 percent drop in its fiscal third-quarter profit, but also did better than Wall Street expected. Deere tumbled $1.31, or 2.9 percent, to $43.78.

Hewlett Packard Co. slipped 13 cents to $43.83 after the company said late Tuesday its profit fell 19 percent in the latest quarter on weak sales. However, the computer company provided an outlook for the fiscal fourth quarter that was better than expected.