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Home sales push stocks to a big gain

NEW YORK - The stock market rebounded Wednesday after a stronger-than-expected increase in pending home sales and a recovery in shares of energy companies.

NEW YORK - The stock market rebounded Wednesday after a stronger-than-expected increase in pending home sales and a recovery in shares of energy companies.

The Dow Jones industrial average rose 225 points, its third-biggest gain of 2010. Major indexes recovered the losses they suffered Tuesday shortly before the close, when the government announced criminal and civil investigations into the gulf oil spill.

Energy stocks bounced back sharply from the day before. Schlumberger, which provides services to oil companies, rose more than 8 percent, while Baker Hughes gained more than 10 percent.

Treasury prices fell, pushing up interest rates, after demand for riskier investments like stocks increased.

The upbeat report on home sales provided some hope on the nation's housing market. An increase in signed contracts for homes was due partly to a rush to meet a tax credit that expired in April. The National Association of Realtors said its index of signed contracts for existing homes rose 6 percent. The increase was ahead of the estimates of economists polled by Thomson Reuters.

"Anything that indicates more of a stabilization - and not rapid declines - in housing is probably a good thing," said Jason D. Pride, director of investment strategy at Glenmede in Philadelphia.

A rise in the euro from a four-year low Tuesday also drew buyers. The currency is seen as a reading on confidence in Europe's ability to contain a debt crisis that began in Greece but that has spread to other parts of Europe.

Stocks have been pounded in the last month by concerns that spending cuts in Europe would hobble a global economy recovery. After reaching a 2010 peak in late April, the Dow fell 7.9 percent last month for its worst May since 1940. The market has been logging big swings because traders are trying to determine how deep the retreat in stocks will be.

The Dow rose 225.52, or 2.3 percent, to 10,249.54 after falling 235 points in the two previous days.

The Standard & Poor's 500 index rose 27.67, or 2.6 percent, to 1,098.38, while the Nasdaq composite index climbed 58.74, or 2.6 percent, to 2,281.07.

Investors are now awaiting the Labor Department's monthly employment report, which is due Friday. It is widely regarded as the most important economic report each month because high unemployment remains a major obstacle to a sustained recovery.

Economists predict that the unemployment rate dipped to 9.8 percent in May from 9.9 percent in April and that employers added 513,000 jobs.

Among stocks, Schlumberger Ltd. rose $4.56, or 8.8 percent, to $56.31. Baker Hughes Inc. advanced $3.76, or 10.5 percent, to $39.63. BP PLC rose $1.14, or 3.1 percent, to $37.66 after dropping nearly 15 percent Tuesday.

Builder KB Home rose 28 cents, or 2 percent, to $14.01, while Hovnanian Enterprises Inc. advanced 18 cents, or 3 percent, to $6.15.

Airlines rose after upbeat comments from analysts. Continental Airlines Inc. climbed $2.25, or 11.1 percent, to $22.54, while US Airways Group Inc., Philadelphia's dominant carrier, advanced 80 cents, or 9.3 percent, to $9.44.