NEW YORK – U.S. stocks advanced, amid their steepest losing streak in four years, as investors made another go at finding a floor after yesterday’s early rally evaporated.
Technology companies led the gains, echoing Tuesday’s action, with Apple Inc., Google Inc. and Qualcomm Inc. rising at least 2 percent. Banks were also on a path similar to yesterday’s with JPMorgan Chase & Co. and Citigroup Inc. increasing more than 1.5 percent. Cameron International Corp. soared 41 percent after agreeing to be bought by Schlumberger Ltd. in a $14.8 billion deal.
The Standard & Poor’s 500 Index climbed 1.1 percent to 1,888.06 at 11:36 a.m. in New York, trimming an earlier 2.5 percent rise. The Dow Jones Industrial Average added 179.25 points, or 1.1 percent, to 15,845.69 after earlier rising more than 430 points. The Nasdaq Composite Index also gained 1.1 percent.
“This type of short-term rally shouldn’t be much surprise given recent weakness,” said Chad Morganlander, a money manager at Stifel, Nicolaus & Co. in Florham Park, N.J., which oversees about $170 billion. “But nonetheless, investors are resetting their global growth expectations, and that’s having a deleterious effect in the longer term. The acceleration of the situation has investors on edge.”
The recent turmoil in global stock markets sparked by growth concerns has reduced expectations for the Federal Reserve to increase interest rates as soon as next month. New York Fed Bank President William Dudley said Wednesday the upheaval has reduced the case for raising rates in September, while cautioning it’s important not to overreact to short-term developments.
Traders are pricing in a one-in-four chance the central bank will act at its next meeting, down from almost even odds before China’s surprise currency devaluation earlier this month.
Fed policy makers remain focused on economic data, which financial markets can influence, Dudley noted, through the wealth effect on U.S. households. A report today showed orders for capital goods increased in July by the most in more than a year, showing corporate spending was finding its footing prior to the turmoil in financial markets. Orders for all durable goods – items meant to last at least three years – rose 2 percent, exceeding all forecasts of economists surveyed by Bloomberg.
More than $2 trillion has been erased from American equity values since the S&P 500 started its losing streak, breaking a calm in a stock market that had gone almost four years without a 10 percent correction. The measure plunged 11 percent in the six days through Tuesday, the most since the U.S. was stripped of its AAA credit rating by S&P in August 2011, and was 1 percent away from erasing its gains since the end of 2013.
A rebound that took the Dow up more than 440 points on Tuesday disappeared in the final hour of trading, with investors giving in to trepidation over what would happen overnight in China. The S&P 500 went from up 2.9 percent to down 1.4 percent. The Shanghai Composite Index closed down 1.3 percent, erasing an advance of as much as 4.3 percent.
After yesterday’s reversal, traders remain cautious. “Given the volatility, you cannot expect the way we open the market is the way we’ll close the market,” said Jasper Lawler, London- based market analyst at CMC Markets Plc. “Yesterday just goes to show that.”
The Chicago Board Options Exchange Volatility Index slipped 4.3 percent Wednesday to 34.47. The measure of market turbulence known as the VIX declined for a second day after a record six- day jump sent the gauge to its highest level since October 2011.
All of the S&P 500’s 10 main industries advanced, with phone companies and health-care joining technology shares as the top performers. Utilities and energy stocks lagged. The Nasdaq Biotechnology Index rose 1.4 percent, with Amgen Inc. and Biogen Inc. rising more than 2.2 percent.
