Commodity gains boost Wall Street

US stocks rose yesterday as commodity-related shares rebounded from last week’s collapse, masking deeper doubts about what will sustain the market’s long-term strength.

Last week a massive sell-off in materials and oil forced investors out of high-risk assets, and stocks ended down about one per cent for the week.

The commodity market slump comes at the end of a decent earnings season and as the Federal Reserve’s bond-buying program also is due to end, leaving investors wondering what catalyst will fuel more stock-market gains.

The Dow Jones industrial average was up 45.94 points, or 0.36 per cent, at 12,684.68. The Standard & Poor’s 500 Index was up 6.09 points, or 0.45 per cent, at 1,346.29. The Nasdaq Composite Index was up 15.69 points, or 0.55 per cent, at 2,843.25.

Despite last week’s losses, the S&P 500 held above important technical levels, with the week’s low just below 1,330 and Friday’s close above 1,340.

On the S&P 500, 1,340 and 1,333 are key levels that should provide strong support and entice buyers, according to Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research.

Investors might also see increased volatility ahead, possibly keeping some on the sidelines, according to Jeff Kleintop, chief market strategist at LPL Financial in Boston.

“The most pronounced characteristic of the market is going to be the return of volatility after two years where stocks did almost nothing but go straight up,” he said. “That might keep individual investors out of the market.”

Energy and materials sectors were the best performers on the S&P 500. The S&P energy index was up 1.6 per cent and the iShares Silver Trust exchange-traded fund also gained, rising 7.3 per cent to $36.98. It was the most actively traded issue on US exchanges yesterday, with about 108m shares traded.

Among other worries for stock investors, Standard & Poor’s downgraded Greece’s rating into junk territory on doubts Athens can manage its debt without imposing losses on private bondholders.

In the financial sector, Citigroup, which in recent months accounted for about six per cent of total composite volume, fell 2.3 per cent and pressured the market after the company’s 1-for-10 reverse stock split.

About 5.76bn shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, well below the average of 7.73bn so far in 2011.