U.S. stocks rally as S&P 500 rebounds from drop into correction

NEW YORK – U.S. stocks rallied, with the Standard & Poor’s 500 Index clawing back some of its losses from a global rout that sent the benchmark into a correction amid the steepest two-day drop since the financial crisis.

Technology shares led the rebound as Apple Inc. jumped the most since January. JPMorgan Chase & Co. and Bank of America Corp. advanced at least 3.8 percent to lead banks back from their worst two-day slide in four years. Best Buy Inc. soared 15 percent after its quarterly profit topped analysts’ estimates, and Netflix Inc. added 9.3 percent to reverse Monday’s decline. Facebook Inc. surged 5.8 percent, the most in a year, after sliding 14 percent in the prior three sessions.

The S&P 500 rose 2.4 percent to 1,937.72 at 12:30 p.m. in New York, on track for its biggest gain this year, after closing Monday in a correction for the first time in four years. The Dow Jones Industrial Average added 358.77 points, or 2.3 percent, to 16,230.12. The Nasdaq Composite Index climbed 3.3 percent, headed for its best advance since 2011.

“I’m not surprised to see the market move up, given the magnitude of the selloff we’ve seen the past four days and the moves made by China after the market close in terms of cutting rates,” said Michael James, managing director of equity trading at Wedbush Securities Inc. in Los Angeles. “The question is whether these levels will hold, and the only guarantee is another day of volatility.”

- Advertisement -

Index futures contracts briefly extended gains earlier after China cut interest rates for the fifth time since November and lowered the amount of cash banks must set aside in an attempt to stem the country’s biggest stock market rout since 1996 and a deepening economic slowdown.

Correction ‘breather’

After a day of wild swings, the S&P 500 lost 3.9 percent Monday to cap a 7 percent two-day retreat, the most since December 2008. JPMorgan Chase & Co. today recommended buying at these levels. The Chicago Board Options Exchange Volatility Index slid 29 percent Tuesday to 28.87, the most in five years. The gauge, know as the VIX, surged as much as 90 percent Monday to touch the highest level since January 2009 before closing at a nearly four-year high.

“The correction was a much-needed breather,” said Kully Samra, who manages U.K. clients for Charles Schwab Corp. in London. “It had been four years since U.S. stocks had seen a correction and there had been very long span of very mild equity performance.”

Data watch

Economic reports may further soothe investors, and offer clues on the timing of an interest-rate increase by the Federal Reserve. Data today showed purchases of new homes rebounded in July, bolstering signs the real-estate market is picking up. A separate report showed consumer confidence climbed more than forecast in August, reaching the second-highest level in eight years on more favorable views of the labor market.

Traders are now pricing in a roughly one-in-four chance the central bank will act at its September meeting, from about 48 percent just before the yuan devaluation, as the rout in equity markets has shaken confidence that the global economy will be strong enough to withstand higher U.S. rates.

Fed Bank of Atlanta President Dennis Lockhart said Monday he still expects a rate raise this year, while cautioning that a stronger dollar, a weaker Chinese yuan and falling oil prices complicate the outlook.

Tech rebound

Nine of the S&P 500’s 10 main groups rose Tuesday, led by technology, consumer discretionary and health-care companies. The Nasdaq Biotechnology Index gained 4.4 percent, the most in more than two years, following a five-day, 13 percent slide.

Some of the hardest hit tech stocks during the past week’s selloff are springing back the most today. Along with Apple and Netflix, chipmaker Qorvo Inc. was up 7.6 percent after sliding more than 14 percent last week. Google Inc. climbed 4.2 percent to reclaim some of its 11 percent drop in the previous three sessions and Yahoo! Inc. rallied 4.7 percent, headed for its best gain since May, after losing almost 14 percent in the prior six days.

Energy shares in the S&P 500 tracked a rebound in oil as West Texas Intermediate crude climbed 3.2 percent from a more than six-year low. Consol Energy Inc. rose 11 percent, on its way to the biggest advance since 2009. Exxon Mobil Corp. increased 3 percent, and Halliburton Co. added 3.5 percent.

No posts to display