U.S. Markets Surge On Wednesday As Oil Slides

July 16, 2008 6:14 p.m. EST

New York, NY (AHN) - All three major indices rose more than 2.5 percent to finish on session highs as a rally in the financial sector and drop in oil prices propelled markets higher.

The Dow Jones Industrial average posted its best one-day gain since April 1, adding 277 points or 2.5 percent on the session. The S&P 500 rose 30 points or 2.51 percent while the Nasdaq Composite saw a 69 point gain, or 3.1 percent.

Advancing issues outpaced decliners by more than 3 to 1 on the New York Stock Exchange, where trading volume reached 1.73 billion shares. After weighing on markets earlier in the week, the financial sector led Wednesday's rally, surging 10 percent, marking the largest single-day increase in the sector's 19-year history.

Wells Fargo helped spark the financials rally after announcing second quarter earnings that topped estimates, raising their quarterly dividend 10 percent. Shares finished 32 percent higher to $27.14.

The airlines jumped 18 percent and homebuilders were also strong, adding 14 percent.

Eight of 10 major economic sectors were higher on Wednesday with energy and utilities being the lagging sectors, off 3 percent and 1.9 percent, respectively.

Energy stocks were hurt by a 3 percent decline in the price of crude oil. The price of the commodity dropped on weekly inventory data that showed a 3 million barrel build in supplies, as opposed to an expected decline. Crude oil finished lower $4.26 a barrel, closing at $134.48 on the New York Mercantile Exchange.

On the economic front, the Labor Department reported the Consumer Price Index (CPI) rose 1.1 percent in June; economists were expecting 0.8 percent. The reading is yet another piece of data showing inflationary pressure still exists.

Earnings from Internet auctioneer eBay Inc. and fast-food chain operator Yum! Brands Inc. are reported after Wednesday's close.