Wall Street gains modestly after two-day selloff, Alcoa jumps

By Ryan Vlastelica

NEW YORK (Reuters) - U.S. stocks rose modestly on Wednesday, partially rebounding from a sharp two-day decline after an early read on earnings came in ahead of expectations.

Alcoa Inc was one of the S&P 500's biggest advancers, up 3.6 percent to $15.38 a day after reporting adjusted second-quarter earnings and revenue that topped forecasts.

While the former Dow component is not considered a market-moving industry bellwether, the aluminum maker is sometimes viewed as setting the tone for the season by dint of being one of the first high-profile names out of the gate with its earnings.

Wells Fargo & Co will report on Friday, while the earnings reports of dozens of closely watched companies, including Dow components, will be released next week.

The S&P 500 is coming off its biggest two-day slump since mid-May, with small-cap and Internet names among the biggest decliners. With Wednesday's advance, the S&P is 0.8 percent away from a record close hit last week.

"The market was encouraged by Alcoa, especially since we were arguably oversold in the very short term," said Steve Sosnick, equity-risk manager at Timber Hill/Interactive Brokers Group in Greenwich, Connecticut.

"However, it's hard to predict big moves ahead of all the news coming out next week, and there's no reason to suspect we couldn't pull back further."

The profits of S&P 500 companies are seen growing 6.2 percent in the second quarter, according to Thomson Reuters data, down from 8.4 percent forecast at the start of April. Revenue is seen up 3 percent. Analysts are looking to the latest earnings for confirmation that the economy recovered in the second quarter from the impact of a harsh winter.

The Dow Jones industrial average rose 20.66 points, or 0.12 percent, to 16,927.28, the S&P 500 gained 3.66 points, or 0.19 percent, to 1,967.37 and the Nasdaq Composite added 11.55 points, or 0.26 percent, to 4,403.01.

Investors await the release of minutes from the Federal Open Market Committee's June meeting at 2:00 p.m. (1600 GMT). It will be scrutinized for insight into how soon the Federal Reserve might raise interest rates, as the strength of a recent payroll report has spurred speculation a hike will come sooner than anticipated.

American Airlines Group jumped 3.3 percent to $41.58 in heavy early trading. The company narrowed the range of its second-quarter unit revenue growth forecast, raising the low end and scaling back the high end compared with its previous forecast in June.

The comments lifted the shares of other airlines, with Southwest Airlines Co up 2.7 percent to $27.41 and Delta Air Lines Inc up 1.9 percent to $37.13.

(Editing by Bernadette Baum)