U.S. stocks rise after Chinese market surges
U.S. stocks continued to recover somewhat Wednesday following the sharp sell-off earlier this week.
Investors were encouraged by a surge in Chinese stocks. China's main stock index logged its biggest gain in eight weeks. There was also good news in the U.S. as a report showed that the U.S. economy expanded at a much faster pace than previously estimated. Energy stocks were among the biggest gainers as oil climbed back above $40 a barrel.
The Dow Jones industrial average gained 369 points, or 2.3 percent, closing at 16,665. The Standard & Poor's 500 index gained 47 points, or 2.4 percent, to 1,988. The Nasdaq composite rose 115 points, or 2.5 percent, to 4,813.
On Tuesday, the market bounced back from a six-day slump, pushing the Dow up 619 points, or 4 percent. That was its third-biggest point gain of all time and its largest advance since Oct. 28, 2008.
Markets have been volatile since China decided to weaken its currency earlier this month. Investors interpreted the move as an attempt to bolster a sagging economy.
Traders are also jittery about the outlook for interest rates. The Federal Reserve has signaled it could raise its key interest rate for the first time in nearly a decade later this year.
William Dudley, president of the New York Federal Reserve Bank, said Wednesday that the case for a U.S. interest rate hike in September is "less compelling" given China's troubles, falling oil prices and emerging markets weakness.
Following a six-year run-up in U.S. stocks that has pushed major indexes to all-time highs, investors worry the economy could falter if the Fed raises rates too soon, chocking economic growth.
All of the 10 sectors in the S&P 500 notched gains, led by energy stocks. The sector rose 3.1 percent, but remains down 21.3 percent this year.
Signet Jewelers jumped 12 percent after reporting earnings that surpassed the expectations of Wall Street analysts.
Tiffany slid 2.1 percent after the luxury jeweler's fiscal second-quarter earnings fell short of Wall Street expectations. The stock lost $1.78 to $83.80.
Germany's DAX gained 3 percent. France's CAC-40 increased 2.8 percent. Britain's FTSE 100 also rose 3 percent.
The Shanghai Composite Index posted its first gain in six days, bouncing back from losses that triggered worldwide selling and wiped nearly 23 percent off its value over the past week. Hong Kong's Hang Seng advanced 2.9 percent to 21,697.31 and Tokyo's Nikkei 225 added 1.1 percent to 18,574.44.
It might be too early to expect a long-term Chinese rebound, cautioned Huang Cengdong of Sinolink Securities in Shanghai.
"Considering the weakening economic outlook, the rally gains won't last long," said Cengdong.
Benchmark U.S. crude gained $1.46 to $40.06 a barrel in New York. The contract fell 71 cents on Wednesday to close at $38.60.
U.S. government bond were little changed from Wednesday, keeping the yield on the 10-year Treasury note rose at 2.18 percent. The dollar rose to 120.48 yen from Wednesday's 120.14 yen. The euro edged down to $1.1261 from the previous session's $1.1337.