Banks and energy companies are surging Wednesday, restoring nearly all of the ground the market lost a day earlier, as investors hope Italy might be able to avoid a new round of elections. Banks are rising along with bond yields after outsize losses a day ago and energy companies are breaking out of a five-day losing streak as oil prices rise. Smaller companies are climbing after they suffered only modest losses the day before.

KEEPING SCORE: The S&P 500 index gained 36 points, or 1.3 percent, to 2,725 as of 3:15 p.m. Eastern time. It lost 1.2 percent Tuesday. The Dow Jones industrial average rose 316 points, or 1.3 percent, to 24,677. The Nasdaq composite added 70 points, or 1 percent, to 7,466. The Russell 2000 index leaped 26 points, or 1.6 percent, to 1,649 and was on pace for another record close.

The S&P 500 and the Nasdaq composite are on pace to recover their losses from Tuesday, with room to spare. The Russell fell less than the rest of the market Tuesday and has fared better than other indexes in recent weeks. It closed at an all-time high on May 21.

ITALY IN FOCUS: Stocks in the U.S. and Europe sank Tuesday as investors worried that Italy would have new elections in a few months and that the vote would become a referendum on whether Italy, the third-largest economy in Europe, would stay in the euro. On Wednesday, premier-designate Carlo Cottarelli said there were “new possibilities” to form a government.

Italy’s FTSE MIB stock index climbed 2.1 percent after a 2.7 percent drop a day earlier. Prices for Italian government bonds also rose, sending yields down following a huge surge the day before.

The euro rose to $1.1648 from $1.1531 a day earlier, which was its lowest level in almost a year. The dollar rose to 108.85 yen from 108.24 yen.

Germany’s DAX climbed 0.9 percent while the FTSE 100 index in Britain rose 0.7 percent. The CAC 40 in France lost 0.2 percent.

THE QUOTE: JJ Kinahan, chief market strategist for TD Ameritrade, said the market often reacts irregularly to political events like the uncertainty in Italy or tensions between the U.S. and North Korea: stocks often fall fast and then recover in quick fashion. That process can sometimes repeat itself weeks or months later.

If there’s no follow-up news, they tend to come back near where they started,” he said. “I wouldn’t count on it being done for the summer.”

BONDS: Bond prices fell. The yield on the 10-year Treasury note rose to 2.84 percent from 2.79 percent. Interest rates rose and bank stocks recovered about half of their losses from Tuesday. When rates rise, banks can make more money on mortgages and other types of loans.

TRADE WOES: After the U.S. renewed a threat to raise duties on a $50 billion list of Chinese goods, China’s government said the administration is going back on an agreement from mid-May, and added that the Trump administration is hurting its credibility by acting erratically. China also said it will respond in kind if the tariffs are implemented. It previously threatened to raise tariffs on beef, soybeans, and other imports from the U.S.

Multinational companies have had a rough ride lately as investors reacted to trade tensions. They have moved money into smaller and more U.S.-focused companies in response.

“Much of their business is done domestically, so the tariffs shouldn’t affect them as badly,” said Kinahan. “But even if the tariffs don’t happen, many of those stocks are performing well.”

ENERGY: Energy companies rose as U.S. crude oil climbed 2.2 percent to $68.21 per barrel in New York. Brent crude, used to price international oils, added 2.8 percent to $77.50 a barrel in London.

Oil prices fell 7.6 percent in five days following reports OPEC countries and Russia might start producing more oil soon. Those countries cut production at the start of 2017, which helped take U.S. crude from about $50 a barrel in late 2016 to more than $70 this month. They had agreed to keep production at its current levels until the end of this year, but upheaval in Venezuela and new sanctions on Iran could change their plans.

Wholesale gasoline rose 1.9 percent to $2.18 a gallon. Heating oil gained 2.1 percent to $2.23 a gallon. Natural gas slid 0.6 percent to $2.89 per 1,000 cubic feet.

EARNINGS: Dick’s Sporting Goods soared 25.9 percent to $38.37 after it raised its annual profit forecast. Its first-quarter report was better than expected thanks in part to strong online sales. Its decision to stop selling assault rifles and cease selling guns to people under 21 didn’t appear to affect its business.

Clothing company Chico’s FAS plunged 18.7 percent to $8.13 after its profit fell short of expectations and luxury retailer Michael Kors dropped 12 percent to $60.04 following a disappointing forecast for the year.

METALS: Gold rose 0.2 percent to $1,301.50 an ounce. Silver added 1 percent to $16.54 an ounce. Copper gained 0.2 percent to $3.07 a pound.

ASIA: Japan’s Nikkei 225 stock index dropped 1.5 percent and the Kospi of South Korea dropped 2. The Hang Seng in Hong Kong slipped 1.4 percent.

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