Crude oil rose and the dollar fell on Monday on strong worldwide factory data and a surprise jump in U.S. pending home sales, but U.S. stocks see-sawed before ending higher after a sell-off in banking shares.
The data boosted risk appetite as it pointed to steady improvement in the economy, but critical remarks by a Federal Reserve official caused investors to sell financial shares and snuff an early rally on Wall Street.
The major U.S. equity indexes had risen about 1 percent as the data and strong results from Ford Motor Co
But Jon Greenlee, associate director of the Federal Reserve's Division of Banking Supervision and Regulation, said U.S. banks are at risk of sizable new loan losses, particularly on commercial property.
Some banks may not have sufficient capital to fully cushion against setbacks, Greenlee said in testimony before a congressional subcommittee meeting in Atlanta.
Questions about whether the seven-month rally in U.S. equities has run out of steam also weighed on sentiment. The Fed is set to begin a two-day policy meeting on Tuesday.
The market has turned from buying on dips to selling on rallies, said Terry Morris, senior vice president and senior equity manager for National Penn Investors Trust Co in Reading, Pennsylvania.
The Dow Jones industrial average <.DJI> was up 76.71 points, or 0.79 percent, at 9,789.44. The Standard & Poor's 500 Index <.SPX> was up 6.69 points, or 0.65 percent, at 1,042.88. The Nasdaq Composite Index <.IXIC> was up 4.09 points, or 0.20 percent, at 2,049.20.
The economic data gave the oil markets a shot in the arm, said Phil Flynn, an analyst at PFGBest Research in Chicago.
Oil futures are still trading in the recent range here, but the market is sensing that if manufacturing continues to be strong that will translate into higher demand for oil, Flynn said.
U.S. crude rose $1.13 to settle at $78.13 a barrel. In London, Brent crude settled $1.35 higher at $76.55 a barrel.
Commodity prices mostly rose, lifting commodity-linked currencies such as the Australian and Canadian dollars.
The pattern in which stocks and the euro are correlated is intact. As stocks rise, so does the euro, said Marc Chandler, global head of FX strategy at Brown Brothers Harriman in New York.
But I don't think we're out of this consolidation and correction in stocks, and even in the euro. I'm not convinced that the downside correction in the euro is over, he said.
The dollar was down against a basket of major currencies, with the U.S. Dollar Index <.DXY> down 0.10 percent at 76.223.
The euro was up 0.36 percent at $1.4768, and against the yen, the dollar was up 0.27 percent at 90.32.
U.S. December gold futures settled up $13.60 at $1,054 an ounce in New York.
The benchmark 10-year U.S. Treasury note was down 11/32 in price to yield 3.43 percent.
Earlier in Asia, worries about the U.S. financial sector resurfaced after CIT Group Inc
The MSCI index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> fell 1 percent to touch a one-month low. Japan's Nikkei average <.N225> dropped 2.3 percent, mirroring the 2.8 percent slide in the U.S. S&P 500 <.SPX> on Friday.
(Reporting by Chuck Mikolajczak, Gertrude Chavez-Dreyfuss, Matthew Robinson and Ellen Freilich in New York; Emelia Sithole-Matarise and Joanne Frearson in London; writing by Herbert Lash; Editing by Leslie Adler)