U.S. stocks advance amid global respite after two-day selloff

NEW YORK – U.S. stocks advanced, after the Standard & Poor’s 500 Index posted one of its steepest drops this year, amid a respite from a global equities selloff.

After pacing the rout yesterday, technology shares led the rebound as Apple Inc. and Intel Corp. rose more than 2.6 percent. H&R Block Inc. jumped 7.6 percent after announcing a stock buyback plan. McDonald’s Corp. and Home Depot Inc. added at least 2.5 percent. Airlines rallied as crude pulled back. Netflix Inc. slid 2.7 percent, down for a fourth day.

The S&P 500 Index rose 1.1 percent to 1,934.07 at 1:16 p.m. in New York, back near session highs after earlier trimming gains. The gauge fell 3.8 percent over the previous two sessions. The Dow Jones Industrial Average added 196.56 points, or 1.2 percent, to 16,254.91 The Nasdaq Composite Index gained 1.4 percent.

“China’s going to be closed the next few days and that means there won’t be this negative lead-in to markets in the morning so that will be a nice reprieve,” said Stephen Carl, principal and head equity trader at Williams Capital Group LP. “The date for a potential rate raise is certainly going back and forth and with the recent volatility in the market and situation overseas, people don’t have much conviction on when it will be.”

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The benchmark equity gauge’s 3 percent decline on Tuesday – its third-biggest of 2015 – marked a sour start to what has historically been the worst month of the year. The S&P 500 falls 1.1 percent on average in September, according to data compiled by Bloomberg going back to 1927.

Another troubling sign is that futures on Chicago Board Options Exchange Volatility Index have climbed, showing traders predict turbulent markets will endure. The gauge known as the VIX fell 9.3 percent Wednesday to 28.48, after a record monthly jump in August,up 135 percent.

The S&P 500 slumped 6.3 percent in August as China’s currency devaluation spurred concern over global growth, erasing more than $5.7 trillion in equity market values worldwide, while volatility surged the most on record. The equity index entered a correction last week, only to then rally more than 6 percent over two days. It closed Tuesday 10 percent below its all-time high set in May.

Chinese shares closed lower on the last trading day of this week as investors assessed the level of state support before a major military parade on Thursday. Mainland markets will be closed Thursday and Friday to commemorate the end of World War II.

“Volatility will stay high for a while,” said Teis Knuthsen, chief investment officer at Saxo Bank A/S’s private- banking unit in Hellerup, Denmark. “China is still making people panic and a lot of us are concerned that we’ll break the lows from last week. But many companies are starting to look very cheap now and the market will eventually find a support level, especially if the Fed doesn’t raise rates this month.”

Amid continuing concerns that China’s slowdown will weigh on the global economy, traders are now pricing in a 34 percent chance that the Federal Reserve will raise interest rates this month, down from 38 percent on Monday. Policy makers have a little more than two weeks to assess incoming data before deciding whether to act on rates.

Jobs data

A report today on private payrolls showed companies added 190,000 workers in August, below the 200,000 forecast by economists surveyed by Bloomberg. Attention will focus on the government’s monthly jobs report, due Friday, as a major data point before the Fed’s meeting. A separate gauge Wednesday showed July factory orders rose 0.4 percent, less than the 0.9 percent growth forecast by economists. June orders grew 2.2 percent, revised up from a previously reported 1.8 percent.

Nine of the S&P 500’s 10 main groups increased on Wednesday, with technology, consumer discretionary and industrial companies performing the best. Energy shares were little changed after erasing a 1.2 percent drop, and utilities slipped.

Along with Apple and Intel, a handful of semiconductor companies boosted the tech group. Nvidia Corp., Qorvo Inc. and Avago Technologies Ltd. all rose more than 1.2 percent. Intel added 2.6 percent as it unveils a new chip design that it says will help make laptops more powerful and easier to use. Microsoft Corp. and Facebook Inc. gained at least 1.6 percent.

Airline rally

Airlines helped lift industrial shares in the benchmark amid the retreat in oil prices. American Airlines Group Inc., Delta Air Lines Inc. and Southwest Airlines Co. rallied more than 2.3 percent. A Bloomberg index of U.S. carriers climbed 3.1 percent, with JetBlue Airways Corp. up 4.6 percent. The Dow Jones Transportation Average gained 1.4 percent.

Health-care shares advanced as biotechnology companies rebounded from a two-day drubbing. Biogen Inc. and Celgene Corp. added at least 1.5 percent. The Nasdaq Biotechnology Index rose 1.4 percent after after a 5.6 percent drop during the previous two days. Bristol-Myers Squibb Co. increased 1.9 percent while Johnson & Johnson climbed 1.2 percent to snap a three-day losing streak.

Transocean Ltd. and Chesapeake Energy Corp. lost more than 2.9 percent as energy shares fluctuated after paring declines with oil. Apache Corp. slumped 2.2 percent, bringing its two-day decline to 6.8 percent. The group has fallen 3.7 percent since Monday’s close, after a four-day, 12 percent rally. West Texas Intermediate crude dropped 1.5 percent, trimming an earlier loss of almost 5 percent, after a government report showed that U.S. inventories climbed the most in four months.

Netflix fell for a fourth day, bringing its decline over the period to 12 percent. Video-streaming service Hulu LLC said it will offer ad-free viewing for $11.99 a month in a move that further competes with services offered by Netflix and Amazon.com Inc.’s Prime Instant Video.

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