Turnaround: Stocks end up after midday reversal

Stocks pulled out of an early slide and closed higher Wednesday as the market math equation that has dominated Wall Street for most of 2016 came back in play: The direction of oil prices determines the direction of stocks.

The Dow Jones industrial average's relief rally of nearly 1,000 points since Feb. 11 had stalled out and looked in troubled, with Dow falling nearly 200 points Tuesday and then another 220 points in early trading Wednesday.

The reason? A renewed sell-off in the energy patch due to dashed hopes for oil production cuts from the world's leading oil producers following comments Tuesday from the Saudi Arabia oil minister suggesting production cuts are "not going to happen."

But that changed midday Wednesday, when news of a smaller-than-expected build in crude inventories last week caused the price of oil to go from a loss of nearly 4% to a gain of 1.3%.

Once again, stocks followed oil's lead. By the close, the Dow Jones industrial average was up 53 points, or 0.3%, to 16,485. The Nasdaq composite gained 0.9% and the benchmark Standard & Poor's 500 index -- after briefly falling back into correction territory of more than a 10% loss from its record close last year -- rebounded to close up 0.4%.

Saudis: No cuts in oil output anytime soon

Large energy stocks in the Dow recovered after taking a fresh hit. Exxon-Mobil (XOM), which fell 1.4% Tuesday, was off flat Wednesday. Chevron (CVX), which plunged more than 4% Tuesday, was down just 0.1%.

"The recent rebound in commodity prices may be stalling," Ed Yardeni, chief investment strategist at Yardeni Research, told clients hours before the opening bell.

Also weighing on market sentiment on Wall Street early Wednesday were comments after Tuesday's market close from Federal Reserve vice chairman Stanley Fischer. In a speech, Fischer did not rule out an interest rate hike from the Federal Reserve at its meeting next month. "We simply do not know" if (the Fed) will increase borrowing costs in March, he said.

Wall Street has downgraded the odds of a March rate hike sharply in recent weeks due to market turbulence and slowing global growth, which was another reason the stock market was able to enjoy a relief rally. Fischer's comments last night will keep the rate-hike debate alive for the next few weeks, however, which will also likely weigh on stocks.

The pain caused by the oil price slump was also evident in comments made Tuesday by JP Morgan Chase CEO Jamie Dimon at the bank's investor day. The bank said it was setting aside an additional $500 million in reserves for possible loan losses in the energy space. And that number could rise, the bank said, if oil prices dip to the $25 per barrel price level and stays there for awhile.

Wall Street pros also say the stock market is running into so-called "overhead resistance" around the 1950 level on the S&P 500. The broad market gauge closed Tuesday at 1921.27 after closing within five points of 1950 on Monday. Overhead resistance is a prior price point where many investors bought, and therefore a level they might consider taking profits at.

"The short-term equity rally is beginning to pause or stall at first key resistance," Robert Sluymer, a technical stock analyst at RBC Capital Markets told clients.

Shares were down sharply in Europe as well. The broad Stoxx Europe 600 was down 2.1%, while Germany's DAX was off 2.3% and the CAC 40 in Paris was 2.1% lower.

Asian stock markets were mixed. The Nikkei 225 in Japan fell 0.9%, the Hang Seng index in Hong Kong dropped 1.2%, while the Shanghai composite in mainland China bucked the losing trend, rising 0.9%.