February 6, 2018 / 11:45 PM / 18 days ago

Dow, S&P 500 edge up in uneven trading; oil prices fall two percent

NEW YORK (Reuters) - The Dow and S&P 500 edged up in choppy trading on Wednesday afternoon, though energy shares dropped as oil prices fell 2 percent after U.S. data fanned fears of oversupply.

European shares closed up 2 percent, snapping a seven-day losing streak, while a world stock index was up slightly.

Equity market choppiness picked up in afternoon U.S. trading, though the Cboe Volatility Index, known as the VIX .VIX, the most widely followed barometer of expected near-term volatility for the S&P 500 index, eased after rising sharply earlier in the week.

On Tuesday, U.S. equities had roared back from Monday’s selloff, when the Dow and S&P 500 saw their biggest one-day declines in two years.

“It takes a number of days for the market to find equilibrium and find a clear bottom,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.

A steep spike in yields last Friday sparked the initial Wall Street rout, forcing sales by a host of highly leveraged funds, which ramped up volatility and drove yet more selling.

On Wednesday, U.S. Treasury prices dropped after the Treasury Department sold new 10-year notes to soft demand and the U.S. Senate reached a budget deal.

Benchmark 10-year notes US10YT=RR last fell 23/32 in price to yield 2.853 percent, from 2.766 percent late on Tuesday.

“Interest rates are still manageable. At this level, they don’t provide competition for the equity market. We still have a long way to go before they’re competitive to the equity market. This is something going to be watched very closely by investors in all asset classes,” Krosby said.

The Dow Jones Industrial Average .DJI rose 172.25 points, or 0.69 percent, to 25,085.02, the S&P 500 .SPX gained 6.92 points, or 0.26 percent, to 2,702.06 and the Nasdaq Composite .IXIC dropped 18.95 points, or 0.27 percent, to 7,096.93.

Snow begins to fall as morning commuters pass by the New York Stock Exchange, (NYSE) in New York, U.S., February 7, 2018. REUTERS/Brendan McDermid

The pan-European FTSEurofirst 300 index .FTEU3 rose 2.02 percent and MSCI's gauge of stocks across the globe .MIWD00000PUS gained 0.40 percent.

Emerging market stocks .MSCIEF lost 0.32 percent. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS closed 0.44 percent lower.

In the energy market, oil prices fell 2 percent. U.S. crude CLcv1 fell 2.5 percent to settle at $61.79 per barrel and Brent LCOcv1 dropped 2 percent to $65.51. U.S. data showed an unexpected build in refined products, fanning fears of oversupply headed into the slow-demand season.

    (Graphic: Global market selloff in February, reut.rs/2BahEeN)

    Like many others, BlackRock analysts described the rout as a buying opportunity, seeing the leveraged products moves as essentially driven by jitters over recent equity gains on one hand, and the possibility of higher interest rates on the other.

    Strategists also point out that the improving global economic outlook is a positive for stocks overall.

    DOLLAR UP, GOLD SLIPS

    The U.S. dollar rose against most major currencies amid the gains on Wall Street.

    The dollar index .DXY rose 0.76 percent, with the euro EUR= down 0.82 percent to $1.2275.

    Gold slipped as the U.S. dollar strengthened. Spot gold XAU= dropped 0.9 percent at $1,313.67 per ounce.

    Additional reporting by Karen Brettell in New York and Sujata Rao in London; Editing by Nick Zieminski and James Dalgleish

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