U.S. stocks make a strong advance at the start of trade as investors pick up shares beaten-down after previous session’s steep decline on global economic fears.
NEW YORK CITY, NEW YORK, UNITED STATES (AUGUST 25, 2015) (NYSE) – U.S. stocks rebounded sharply on Tuesday (August 25) as investors sought out bargains a day after Wall Street turned in its worst performance in four years.
Markets also got a shot of good news with China’s second interest rate cut in two months, but analysts stopped short of declaring that the worst was over.
“I think that until we get more indication of stabilization, not just domestically but around the world, I think it will be that heightened volatility that will lead the day, said Eric Wiegand, Senior Portfolio Manager for a private client reserve of US Bank.
All the three major Wall Street indexes were up more than 2 percent, with tech stocks and banks leading the way.
On Monday, the Dow Jones industrial average briefly slumped more than 1,000 points – its steepest intraday fall ever – and the S&P 500 recorded its worst day since 2011.
For the second consecutive day, the New York Stock Exchange invoked a rarely used rule in an effort to make it easier and faster to start trading at the opening in a volatile market.
The move by China’s central bank came after Chinese stocks slumped 8 percent on Tuesday. They fell 8.5 percent on Monday amid growing concerns about slowing economic growth.
At 9:36 a.m. ET (1336 GMT) the Dow Jones industrial average was up 374.74 points, or 2.36 percent, at 16,246.09, with all 30 of its components in the black.
The S&P 500 was up 42.71 points, or 2.26 percent, at 1,935.92 and the Nasdaq composite .IXIC was up 131.70 points, or 2.91 percent, at 4,657.95.
Wiegand says he sees opportunity in equities despite the the recent high volatility of the markets.
“For U.S. investors we find that this is creating opportunities. We still believe that as far as domestic equities are concerned there is a great deal of attractiveness to shares. As of last night’s close we’re trading about 16.1 times our calendar year estimate for this year, so valuations are certainly more compelling. We don’t envision a dramatically higher interest rate environment so that should be conducive for equity investors,” said Wiegand.
All 10 major S&P sectors were higher with the technology index’s 2.87 percent rise leading the advancers.
Apple’s shares jumped 5.1 percent to $108.43 (USD), giving the biggest boost to the Nasdaq. The stock slumped as much as 13 percent on Monday, before ending down 2.5 percent.
All big U.S. banks were higher, with Bank of America up 4.8 percent at $16.03.
The dollar, which fell to a 7-month low against a basket of currencies on Monday, was up about 1 percent.
Oil prices were up about 3 percent, bouncing back from heavy losses on Tuesday, but U.S. crude still remained below $40 per barrel.