While you were sleeping: UPDATED US shares rebound as oil rises

Stocks on Wall Street rebounded in afternoon trading, buoyed by a rally in energy and materials shares.

The Dow Jones Industrial Average gained 183 points, or 1.1%, to 16,336.66, after falling as much as 193 points earlier in the session and following lower share prices in Europe.

The S&P 500 added 0.5% to 1912.53, while the Nasdaq Composite fell 0.3% to 4504.24.

The energy and materials sector indexes gained 4% and 3.3%, respectively, as oil prices surged. US crude futures gained 8% to $US32.28 a barrel.

"I think the next couple of quarters could be really volatile," Bryce Doty, portfolio manager at Sit Investment Associates, told Reuters.

"You need the markets to settle into a new equilibrium without this manipulated support from the [US Federal Reserve], which means a correction. The problem with corrections is that markets tend to over correct before they rebound."

US Treasurys fell, pushing yields on the 10-year note yield three basis points higher to 1.87%.

Shares of Yahoo dropped 4.7% after its results and saying it's looking at "strategic alternatives.” It will also layoff 15% of its workforce.

GM profit rises, shares fall
Meanwhile, General Motors posted a fourth-quarter profit that surpassed expectations. It reported record net income for the full year. Still, its results weren't enough to stop its stock falling 2.5%.

"The fourth quarter closed another very strong year of operating performance," General Motors' chief financial officer Chuck Stevens says. "We plan to improve our results in 2016, driven by a significant vehicle launch cadence, continued emphasis on growing our adjacent businesses and an unrelenting focus on driving efficiencies into our core operations."

US jobs data remains strong. A report by ADP shows private employment rose 205,000 in January, beating economists' expectations, and following an upwardly revised 267,000 in December.

On Friday a Labor Department report is expected to show US employers hired 190,000 workers last month, while the jobless rate held at 5%, according to a Bloomberg survey of economists.

However, other reports were disappointing and raised concern about the strength of the economy.

The Institute for Supply Management's index of non-manufacturing activity weakened to 53.5 in January, the lowest level in nearly two years and down from 55.8 in December.

Separately, Markit's services business activity index slid to 53.2 last month, the lowest level since October 2013 and down from 54.3 in December.

"Going back a half year or so, it had seemed that the weakness in the economy was fairly isolated in the manufacturing sector as well as a few other areas, mainly energy and exports," Daniel Silver, an economist at JPMorgan in New York, told Reuters. "But we now have these surveys showing that the service sector has weakened as well over the past few months."

In Europe, the Stoxx 600 Index ended the day with a 1.5% drop from the previous close. France's CAC 40 Index declined 1.3% the UK's FTSE 100 Index retreated 1.4%, while Germany's DAX Index fell 1.5%.

UPDATED for Wall Street close (10am NZ time)

(BusinessDesk)