U.S. Stocks Surge After China Cuts Rates To Help Economy
NEW YORK (CBSNewYork/AP) -- Stocks surged Tuesday afternoon 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.
Traders around the world welcomed the move, which came after a dayslong global sell-off triggered by fears of a slowdown in China.
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 301 points, or 1.9 percent, to 16,172 as of 1:03 p.m. Eastern time. The Standard & Poor's 500 index gained 37 points, or 2 percent, to 1,931. The Nasdaq composite rose 134 points, or 3 percent, to 4,661.
Nine of the 10 sectors in the S&P 500 moved higher, with technology leading the pack, up 3.3 percent. Best Buy recorded the biggest gain in the index, climbing $4.35, or 15 percent, to $33.67, after the home electronics chain reported better-than-expected results for the quarter.
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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.
All Eyes On Wall Street After Sell-Off
A lot people with investments, especially those close to retirement, were still rattled by the huge sell-off.
"Whatever I have, I have to anticipate it's going to be probably 30 to 40 percent less," one investor told 1010 WINS' John Montone.
"Very scary, very scary. I don't know what's going to happen," said investor Cathy Pasquerella. "I don't even want to look at my account."
Others were confident the market would stabilize and were happy with what they've seen so far Tuesday.
"Oh, it's coming back," investor Mike Kulbida told CBS2's Janelle Burrell. "A blip of the screen."
Financial experts advise investors and those concerned about their 401-ks to focus their efforts on diversifying their portfolios instead of making major changes to their investments.
"The reality of it is when you decide to make a knee-jerk decision selling at the bottom, jumping in at the top, you usually regret it," said CBS News business expert Jill Schlesinger.
"If you're approaching retirement and you have 80 percent of your portfolio in stocks, then your portfolio is upside down," said David Nelson, chief strategist at Belpointe Asset Management. "If you're 26, this is a speed bump. It means absolutely nothing. Keep pouring your money into the market."
European markets recovered almost all their losses from Monday. Germany's DAX jumped 5 percent, while the CAC-40 in France rose 4.3 percent. The FTSE 100 index of leading British shares rose 2.8 percent.
China's central bank took action hours after the country's main stock index closed sharply lower for a fourth day. The Shanghai stock index slumped 7.6 percent, on top of Monday's 8.5 percent loss.
Tokyo's Nikkei 225 also closed lower, sliding 4 percent. But other markets in Asia posted modest recoveries. Hong Kong's Hang Seng index rose 0.7 percent, while Sydney's S&P ASX 200 gained 2.7 percent.
Oil rebounded some from Monday's steep declines. Benchmark U.S. crude gained $1.36 to $39.61 per barrel in New York.
U.S. government bond prices fell, pushing up the yield on the 10-year Treasury note to 2.10 percent.
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