(Bloomberg) -- U.S. stocks rallied for a second day, rebounding from the biggest monthly drop in a year for the Standard & Poor’s 500 Index, as a four-day rally in energy stocks spread to the broader market.

Exxon Mobil Corp. and Chevron Corp. climbed more than 2.6 percent as Brent crude entered a bull market. Freeport-McMoRan Inc. rose 9.1 percent as commodities had the biggest three-day advance since 2012. Office Depot Inc. jumped 22 percent after the Wall Street Journal reported the company is in advanced merger talks with Staples Inc.

The S&P 500 added 1.2 percent to 2,045.13 at 3:23 p.m. in New York, climbing above its average level for the past 50 days. The Dow Jones Industrial Average rose 277.24 points, or 1.6 percent, to 17,638.28. That gauge is up 2.8 percent over two days. Trading in S&P 500 companies was 32 percent above the 30-day average.

“The fact that oil is stabilizing takes some edge off the argument that the global economy is really in trouble,” Bruce Bittles, chief investment strategist at Milwaukee-based RW Baird & Co., which oversees $110 billion, said in a phone interview. “The markets are a little oversold after being down in January, which is also part of the strength today.”

David Fuller's view

Given the US stock market’s size it remains a big influence on equity trends in other parts of the world.  Consequently, few investors can afford to overlook market developments on Wall Street, where the technical action has been nervous since October 2014.  It has also been ranging in a volatile fashion so the next sustained breakout is likely to be important – up or down.   

Have a look at these charts for the S&P 500 (daily & weekly), DJIA (daily & weekly), Nasdaq 100 (daily & weekly), Transports (daily & weekly) and Russell 2000 (daily & weekly).  Interestingly, in the last two days they have rallied positively from the three previous lows since mid-December, although the Russell 2000 has been rangebound for over a year.  Nevertheless these indices have all tested their rising 200-day MAs this week and are still trading above those trend smoothing averages.  Give the upside the benefit of the doubt, unless the last four lows since mid-December are broken by all of the indices above.  Sustained new highs are required to reconfirm overall uptrends. 

Choppy action tells us that everyone has different views on the markets, as if we did not already know that.  Here is a brief summary of my views.  1) Seasonal factors remain very favourable for the USA.  2) Corporate earnings are mostly higher, albeit with the help of share buybacks, reducing overall valuations although the US is still more expensive than other markets.  3) Global interest rates remain favourably low.  4) Destructive deflation fears are exaggerated because there is also an increasing level of generally positive deflation due to improving technology.  5) This has increased commodity production generally; traders were heavily short and are being forced to cover.  6) Crude oil prices have established lows of at least near term significance.  7) QE from the ECB is boosting European stock markets and helping to hold the Eurozone together.  7) The Greece problem will be postponed by loan extensions.  8) Putin remains dangerous but has been weakened by crude oil’s slump and sanctions.     

(See also: Implications of the current rally in crude oil prices, posted on Tuesday.)