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Stocks Bounce Back as Oil Tops $71

Stocks got a weak start after the selloff in China but rebounded by midday after a report showed a surprise drop in crude inventories, which sent oil prices — and energy stocks — soaring.

The Dow dropped sharply at the opening bell, was down just 20 points by late morning, and was up about 90 points in afternoon trading.

This came after stocks rallied Tuesday, snapping a two-day losing streak that many market pros said might be the start of a correction.

Merck was the top gainer on the Dow after a court upheld the patent on the firm's allergy drug Singulair, effectively blocking a generic version from India's Teva Pharmaceuticals.

It was followed by ExxonMobil as crude prices climbed back above $71 a barrel after a surprise drop in crude suplies.

In the day's other economic news, mortgage applications rose last weekamid an increased demand for refinancing as mortgage rates slid to a five-week low.

As earnings season winds down, the market received a positive surprise from Deere, which easily beat Wall Street estimates on quarterly profit of 99 cents per share.

The numbers, though, were like many other companies this quarter with a beat in bottom-line profit but weak top-line revenue numbers. Traders soured on the stock after boosting it earlier.

UBS shares slipped after the Swiss bank agreed to hand over details of about 4,450 bank accounts to the US.

Shares of Dow component Hewlett-Packard fell about 2 percent after the company late Tuesday reported its profit dropped 19 percent, though it did make optimistic comments about consumer spending on PCs.

Analog Devices shares rose after three brokerages raised their price targets on the stock, saying they expect margins to improve in coming quarters.

Elsewhere in earnings, afternoon reports include JDS Uniphase and Limited Brands .

Alcoa has been under pressure this week as aluminum prices have tumbled. The Dow component continued to slide as aluminum prices fell more than 2 percent.

This Week:

WEDNESDAY: Earnings from Limited after the bell
THURSDAY: Weekly jobless claims; leading indicators; Philly Fed survey; Earnings from Gamestop, Hormel, and Sears
FRIDAY: Existing-home sales; Earnings from JM Smucker

Send comments to cindy.perman@nbcuni.com.