UPDATE: 12:05 p.m.
Stocks surged Tuesday morning on Wall Street, erasing some of the heavy losses of a day earlier, after China cut interest rates to try to boost the world’s second-largest economy.
Shortly after noon Tuesday, the Dow had risen about 350 points, and the wild swings of Monday had abated.
Traders around the world welcomed the move, which came after a days-long global sell-off triggered by fears of a slowdown in China.
“They’re relieved by what China has done,” said Chris Gaffney, president of EverBank World Markets, and are telling themselves: “Maybe it’s time to get back in there.”
Investors also got some encouraging news from a survey indicating that U.S. consumer confidence rebounded this month. A separate report showed sales of new U.S. homes bounced back in July.
The Dow was up 410 points, or 2.6 percent, to 16,281 about two hours after the opening bell. The Standard & Poor’s 500 index gained 51 points, or 2.7 percent, to 1,944. The Nasdaq composite rose 136 points, or 3 percent, to 4,663.
The 10 sectors in the S&P 500 all moved higher, with technology leading the pack, up 3.6 percent. Best Buy recorded the biggest gain in the index, climbing $4.13, or 14.1 percent, to $33.42, after the home electronics chain reported better-than-expected results for the quarter.
The Dow sank more than 588 points on Monday, while the S&P 500 index fell to more than 10 percent off its recent peak, in what investors refer to as a “correction.” The previous market correction was nearly four years ago.
The three indexes have closed lower five days in a row, with the Dow falling nearly 1,700 points in that time.
China cut its interest rates for the fifth time in nine months in a renewed effort to shore up economic growth. The central bank also increased the amount of money available for lending by reducing the reserves banks are required to hold.
The move came as Beijing appeared to be abandoning a strategy of having a state-owned company buy shares to stem the market slide.
Analysts said that while Tuesday’s actions by the central bank may calm the stock market turmoil for now, the country faces a long period of uncertainty.
“The Chinese economy is going to be on this bumpy road for a while, and it will have ebbs and flows that will no doubt have a serious impact on the global economy,” said Kamel Mellahi, professor at the Warwick Business School. “What we are seeing now is a dress rehearsal of things to come.”
UPDATE: 9:35 a.m.
U.S. stocks jumped at the open after China’s central bank cut interest rates to support its economy.
The Dow Jones industrial average rose 296 points, or 1.9 percent, to 16,180.61, as of 9:45 a.m. Eastern time. The Standard & Poor’s 500 index climbed 38 points, or 2 percent, to 1,932. The Nasdaq composite rose 109 points, or 2.4 percent, to 4,635.
Oil prices are up, but U.S. crude is still trading below $40 a barrel.
Treasury notes are falling, pushing up the yield on the 10-year benchmark not to 2.08 percent.
Best Buy was the biggest gainer in the S&P 500 index. The stock surged 16.4 percent after its fiscal second-quarter results handily beat analysts’ estimates as shoppers picked up major appliances, large screen televisions and mobile phones
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UPDATE: 6:22 a.m.
The world’s stock markets showed promising signs of stabilizing this morning, although stocks in China are still taking a beating.
After a three-day rout erased nearly $3 trillion in value from stocks globally, volatility continued to dominate early trading in Asia, but many regional markets swung from losses to gains for the first time in days. Stocks in Europe opened higher: the Euro Stoxx 50 rose 3.1 percent in late-morning trading, and in London, the FTSE 100 rose 2.6 percent. In the U.S., trading in Standard & Poor’s 500 index futures suggested the U.S. markets would also open the day with a strong surge of buying, according to the New York Times.
Across Asia, the free fall of the past few days appeared to have ended — except in China, where Shanghai stocks closed 7.6 percent lower after Monday’s 8.5 percent drop, and in Japan, where Tokyo’s Nikkei 225 average was in positive territory for parts of the day, but ended up closing down 4 percent. China this morning cut interest rates for the fifth time since November in new effort to boost its slowing economy.
U.S. stock futures were also up after Monday’s global sell-off. Dow Jones index futures were up 2.7 percent, while S&P 500 index futures were up 2.8 percent, an indication the U.S. market was set to open higher. Analysts said it was unclear whether the rebounds in some markets were indications that the worst was over or a reprieve in a longer-term bear market.
Wall Street had a stomach-churning day Monday, when the Dow plunged more than 1,000 points at one point before finishing down 588.40 points, or 3.6 percent, at 15,871.35. The Standard & Poor’s 500 index slid 77.68 points, or 3.9 percent, to 1,893.21, and is now in “correction” territory, Wall Street jargon for a drop of at least 10 percent from a recent peak. The last market correction was nearly four years ago.
But local veteran market-watchers say this is no time to bail out of the stock market.
“This is no 2008,” said Terence Lau, professor and associate dean of management and marketing in the University of Dayton’s School of Business, in reference to the market losses that accompanied the Great Recession. “There is no way this is even close to 2008. Folks should not panic.”
Josh Taylor, financial adviser with the Edward Jones brokerage firm office, delivered a similar message.
“We’re telling our clients this is a normal event,” Taylor said Monday. A correction, when stocks shed at least 10 percent of their value, happens about once a year, and a drop in value of at least 20 percent occurs once every three or four years — although it’s not clear the most recent downturn will reach that level, Taylor said. The current market was overdue for such a drop.
While emphasizing he doesn’t know what will happen or when, Taylor said he’s optimistic about a rebound.
“We’ve had 50-some corrections, and they’ve all come back, and the market ends up higher than it was,” he said.
Economists and market analysts point to a robust U.S. job market — unemployment has dropped to pre-recession levels — as well as a modestly growing U.S. economy and a rebound in the housing market as signs the American economy has a solid foundation for now.
Money manager Jim Russell of Cincinnati investment advisory firm Bahl & Gaynor doesn’t expect a long-term impact on investors.
“When the markets go down — and go down suddenly and violently — it’s not a confidence builder,” Russell said. However, “We don’t think we’re close to recession here in the United States this year or next year. Unemployment is low. Inflation is low. Interest rates are low. Those are three things really positive for the consumer.”
Tony Caporale, professor of economics at the University of Dayton, said those who have a longer-term investment horizon of a decade or more may be better off shrugging off the most recent losses and continuing to invest, in part because the market correction will bring down share prices.
“It’s kind of ironic that stocks are the only thing that, when they go on sale, no one wants to buy,” Caporale said.
• This story contains material from The New York Times and the Associated Press.
• Staff Writers Thomas Gnau and Chelsey Levingston contributed to this report.
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