A Greek flag flies outside the Athens Stock Exchange, Tuesday, Feb. 3, 2015. Greek stocks led a European market rally Tuesday on indications that the country’s new radical left government is advocating a more palatable version of its brash demand for massive debt forgiveness that had horrified bailout creditors and investors.Petros Giannakouris/The Associated Press
The Toronto stock market and U.S. stocks rose, after the Standard & Poor's 500 Index rebounded from its biggest monthly decline in a year, as oil prices rallied for a fourth day and Staples Inc. and Office Depot Inc. surged on merger speculation.
The Dow Jones industrial average gained 184.9 points to 17,545.90. The S&P 500 rose 18.48 points to 2,039.33. The Nasdaq composite was up 33.66 points to 4,710.35.
In Toronto, the S&P/TSX composite index jumped 168.3 points to 15,068.80.
The Canadian dollar continued to rise, adding 0.27 of a cent to 79.86 cents (U.S.)
Office Depot jumped 17 per cent after the Wall Street Journal reported the company is in advanced merger talks with Staples. Staples rose 10 per cent. Exxon Mobil Corp. and ConocoPhillips climbed, tracking oil's longest rally since August.
The S&P 500 added 0.5 per cent to 2,030.56 at 9:31 a.m. in New York.
Energy stocks rose 1.2 per cent as crude oil climbed than 2.2 per cent to $50.66 (U.S.), up $1.09 – above the crucial $50-a-barrel level.
Oil has rallied amid signs the plunge in prices is leading to cuts in production. Chevron Corp. and Royal Dutch Shell Plc lowered their spending targets for this year as the industry cut more than $40 billion from budgets since Nov. 1. BP Plc said Tuesday it will lower spending by 13 percent. U.S. drillers idled 94 rigs last week, the most in data starting in 1987, according to data from Baker Hughes Inc.
"Bullish sentiment remains elevated," Benedict Goette, founder of asset-management firm Compass Capital AG in Zurich, said in an e-mail. "For the next one-to-two weeks, U.S. markets will be trying to find a new direction and will be prone to fake-outs – up as well as down – and this could be a very challenging trading environment."
The S&P 500 rebounded 1.3 per cent Monday as a rally in crude sparked gains in energy shares. The index lost 3.1 per cent in January, the worst performance in a year, after reaching an all-time high on Dec. 29.
U.S. equities followed European stocks higher on Tuesday after Greece retreated from a plan to ask the euro area to write down debt. That eased concern that the nation would defy its creditors.
Greek Finance Minister Yanis Varoufakis outlined plans to swap some Greek debt owned by the European Central Bank and the European Financial Stability Facility for new securities linked to the country's growth, according to a person who attended a meeting of about 100 financiers in London late on Monday. Varoufakis indicated that the move would allow Greece to avoid imposing formal losses on creditors, the person said.
"It's good news that there is no haircut," Tristan Abet, a strategist at Louis Capital Markets LP, said by phone from Paris. "We're seeing the normalization. It's quite smart to link the bonds to economic growth."
Investors are watching U.S. factory orders data later today, which a Bloomberg survey suggests may show an extended decline in December.
Walt Disney Co. and Chipotle Mexican Grill Inc. are among 25 S&P 500 members reporting financial results today. About 78 per cent of the companies that posted earnings this season have beaten analyst estimates, while 54 per cent have topped sales projections, data compiled by Bloomberg show.