September 8, 2015 By Evelyn Cheng
U.S. stocks traded sharply higher Tuesday, trying for recovery after the long weekend and their second-worst week for the year.
“I think it’s just a bounce from a lousy week,” said Maris Ogg, president of Tower Bridge Advisors. “There are a number of things coming up (such as bank loan reviews in October) that I think we need to get through before this is over.”
The major averages traded between 1.5 to about 2 percent higher. The Dow Jones industrial average traded about 280 points higher after earlier adding nearly 338 points. General Electric jumped 3.5 percent to lead nearly all blue chips higher.
GE won European approval Tuesday for a roughly $13.5 billion acquisition of the power business of France’s Alstom. The acquisition is the largest purchase in GE’s history and came 16 months after the first announcement.
The Nasdaq outperformed, in the black for 2015, while the other two averages remain negative for the year so far.
Apple traded about 1.5 percent higher, helping information technology as one of the top advancing S&P 500 sectors.
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The S&P 500 and Nasdaq composite held out of correction territory, while the Dow was less than 1 percent away from exiting correction mode.
“We’re pausing to digest a violent selloff,” said Adam Sarhan, CEO of Sarhan Capital. “At this stage in the game it’s a very important and healthy (development).”
He noted the S&P 500 remains in a range between 1,867 and 1,993, after closing at 1,921 Friday.
U.S. stocks closed more than 1 percent lower Friday, when mainland Chinese exchanges were closed, under pressure from uncertainty over developments in China and the timing of a U.S. rate hike. The major averages closed down about 3 percent for the week, their second-worst for the year.
“I think the worst-case scenario of China reopening (lower) didn’t come to fruition,” said Art Hogan, chief market strategist at Wunderlich Securities. You can “hear the sigh of relief globally and domestically.”
Dow futures briefly added more than 300 points following gains in European stocks. Benchmark stock indices in the U.K., France and Germany ended more than 1 percent higher.
“I think it’s a week where we’re risk-on… barring any negative news out of China,” Hogan said.
The Hang Seng ended up 3.28 percent and the Shanghai Composite closed almost 3 percent higher brushing aside the soft data on reports that railway projects worth almost $11 billion have been approved.
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Data released Tuesday showed China’s dollar-denominated exportsdeclined by 5.5 percent year-on-year in August, while imports tumbled 13.8 percent.
On Monday, China’s foreign exchange reserves posted their biggest monthly fall on record in August, reflecting Beijing’s attempts to halt a slide in the yuan and stabilize financial markets following its surprise move to devalue the currency last month.
“The market volatility continues and will probably sty this way until we get the Fed out of the way,” said Peter Cardillo, chief market economist at Rockwell Global Capital.
The National Federation of Independent Business said on Tuesday its Small Business Optimism Index rose modestly in August, up half a point to 95.9. The gain suggests the economy continued to grow at a steady clip halfway through the third quarter.
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The Dow Jones Industrial Average traded up 281 points, or 1.7 percent, at 16,382, with General Electric leading all blue chips higher except forChevron.
The S&P 500 traded up 30 points, or 1.6 percent, at 1,951, with industrials leading all 10 sectors higher.
The Nasdaq traded up 81 points, or 1.7 percent, at 4,765.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 25.
About five stocks advanced for every decliner on the New York Stock Exchange, with an exchange volume of 355 million and a composite volume of nearly 1.6 billion as of 12:40 p.m.
Crude oil futures for October delivery fell 13 cents to $45.91 a barrel on the New York Mercantile Exchange. Gold futures gained $2.60 to $1,124.00 an ounce in midday trade.
The U.S. dollar traded mildly lower against major world currencies, with the euro approaching $1.12.
Treasury yields held higher, with the 10-year yield at 2.19 percent and the 2-year yield at 0.74 percent.
The U.S. Treasury sold $24 billion in 3-year notes at a high yield of 1.056 percent.
Earnings: Casey’s General, Dave & Buster’s, Men’s Wearhouse, Pep Boys, TiVo
3 p.m.: Consumer credit
Earnings: HD Supply Holdings, Barnes & Noble, Hovnanian, Palo Alto Networks, Box, Krispy Kreme
7 a.m.: Mortgage applications
10 a.m.: JOLTS
10 a.m.: Quarterly services survey
1 p.m.: 10-year note auction
Earnings: Lululemon Athletica, Finisar, Zumiez
8:30 a.m.: Jobless claims
8:30 a.m.: Import and export prices
10 a.m.: Wholesale trade
10:30 a.m.: Natural gas inventories
11:00 a.m.: Oil inventories
1 p.m.: 30-year bond auction
4:30 p.m.: Fed balance sheet, money supply
Earnings: Kroger, Mattress Firm
8:30 a.m.: PPI
10 a.m.: Consumer sentiment
1 p.m.: Oil rig count
2 p.m.: Treasury budget
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