Wall Street rebounds as post-Brexit bargain hunt begins

Wall Street opened sharply higher on Tuesday as investors rushed to pick up stocks after Britain's decision to leave the European Union sparked a massive two-day selloff in global markets.

Banks, which were the worst hit since the referendum on Thursday, were among the most attractive stocks for bargain hunters. The S&P financial index rose 1.32 percent.

Morgan Stanley, Bank of America, Citigroup and JPMorgan were all up more than 2.5 percent while Goldman Sachs rose 1 percent.

Global equities commenced a free fall on Friday, losing more than $2 trillion in market capitalization, as investors scrambled to safe havens such as gold and the Japanese yen.

A rebound in oil prices on Tuesday signaled an appetite for riskier assets, while gold lost its two-day shine and fell 1.1 percent.

The yield on 10-year U.S. Treasury bonds turned positive on Tuesday after two days.

However, uncertainty over when and on what terms Britain will end its membership is expected to fuel volatility in the next few weeks.

"I think this is a short-lived rally," said Paul Nolte, portfolio manager as Kingsview Asset Management. "There is an awful lot of questions over Brexit that haven't been answered and markets are going to be reacting to that."

At 9:46 a.m. ET (1346 GMT) the Dow Jones Industrial Average was up 186.41 points, or 1.09 percent, at 17,326.65.

The S&P 500 was up 22.23 points, or 1.11 percent, at 2,022.77.

The Nasdaq Composite was up 66.35 points, or 1.44 percent, at 4,660.80.

Nine of the 10 major S&P sectors were higher, led by a 1.75 percent gain in the energy index. Exxon and Chevron rose more than 1 percent each.

Technology stocks, which were also hard hit by Brexit, reversed course. Microsoft rose 1.1 percent and gave the biggest boost to the S&P.

"The U.S. markets are still very expensive without a lot of economic and earnings momentum in the future and are unlikely to move significantly higher in the near term."

The S&P 500 is trading at about 15.9 times expected earnings, above the 10-year average of 14.7 times, according to Thomson Reuters StarMine.

While investors do not expect the U.S. Federal Reserve to raise short-term interest rates anytime this year, they will keep an eye on economic data that can steer the Fed's sentiment.

Gross domestic product increased at a 1.1 percent annual rate, rather than the 0.8 percent pace reported last month, the Commerce Department said on Tuesday.

Consumer confidence is expected to have risen to 93.3 in June from 92.6 in May. The data is expected at 10:00 a.m. ET (1400 GMT).

Advancing issues outnumbered decliners on the NYSE by 2,577 to 272. On the Nasdaq, 2,147 issues rose and 309 fell.

The S&P 500 index showed nine new 52-week highs and no new lows, while the Nasdaq recorded 10 new highs and 15 new lows.