By Anora Mahmudova and Sara Sjolin, MarketWatch
Dow jumps triple digits; Energy helps lead S&P 500 gains
A slowdown in China's stock market along with
better-than-expected earnings reports proved enough to spark a
relief rally on Wall Street Tuesday, helping snap a five-day losing
streak in the main U.S. indexes.
Investors brushed off softer economic reports, while focusing on
the two-day Federal Reserve meeting, which kicked off on Tuesday
and concludes Wednesday with a policy statement.
The S&P 500 index added 25.61 points, or 1.2%, to 2,093.25,
with the energy and sector leading the gains. The energy sector
jumped 3%, following a bounce in oil prices, which settled higher
for the first time in five sessions.
The Dow Jones Industrial Average gained 189.68 points, or 1.1%,
to 17,630.27, with 27 of its 30 members finishing higher. Exxon
Mobil Corp. (XOM) share surged 4.1%, while Chevron Corp. (CVX) rose
3.7%.
The tech-heavy Nasdaq Composite Index added 49.43 points, or 1%,
to 5,089.21, as biotechnology stocks rose sharply. The iShares
Nasdaq Biotechnology ETF (IBB) gained 2.5%.
Global equities rebounded on Tuesday as the selloff in the
Chinese benchmark
(http://www.marketwatch.com/storyno-meta-for-guid) after a dramatic
8.5% loss on Monday was more subdued, ending 1.7% lower.
Read: With China, stock market manipulation goes global
(http://www.marketwatch.com/story/market-manipulation-goes-global-2015-07-27)
"What investors forget is that China's stock market is still
higher than it was at the beginning of the year," said Martin
Leclerc, chief investment officer and portfolio manager at Barrack
Yard Advisors.
"The bigger question is that investors have to get used to the
idea that China is transitioning to a consumer-based economy and
will grow at a more 'normal' 4%-5% pace," Leclerc said.
Fed meeting: An FOMC statement is due at 2 p.m. on Wednesday
after two days of meetings, and is likely to be scrutinized for
clues to the timing of an interest-rate hike.
Chairwoman Janet Yellen has previously indicated that a rate
increase is in the cards before the end of the year, possibly as
early as September.
However, expectations for a September hike have faded recently,
partly because of the market turmoil in China and a slide in oil
prices.
David Wright, managing director at Sierra Investment Management,
is skeptical about rate hikes this year.
"There is a trend toward deflation and a recession in Europe
which is impacting the U.S. economy. And inflation here is falling
as well. We think that given deflation the Fed is not going to
raise interest rates for the next six months," Wright said.
Read: Fed is closer to a September rate hike than many think,
says FedWatch's Tim Duy
(http://www.marketwatch.com/story/fed-is-closer-to-a-september-rate-hike-than-many-think-says-fedwatchs-tim-duy-2015-07-27)
The dollar moved higher against the yen and the euro
(http://www.marketwatch.com/story/dollar-gains-against-yen-but-weakens-vs-pound-2015-07-28)
ahead of the Fed meeting, with the ICE dollar index inching 0.2%
higher to 96.6590.
"A lot of the negative sentiment arrives from the speculation
that the Fed are on the cusp of hiking rates. This, in light of
global deflation and significant debt loads will only add insult to
injury. A stronger dollar (relatively speaking) is doing little to
spur inflation," wrote Brenda Kelly, head analyst at London Capital
Group.
Data: Consumer confidence fell sharply in July, perhaps because
of a more volatile U.S. stock market triggered by financial worries
in China and the latest Greek debt crisis.
The Case-Shiller home-price index for May showed that home
prices rose 1.1% but after seasonal adjustments, the reading showed
a decline of 0.2%. See the city-by-city breakdown here
(http://www.marketwatch.com/story/city-by-city-look-at-house-prices-2015-07-28).
Earnings:United Parcel Service Inc.(UPS) stock jumped 5.1% after
the package-delivery company beat second-quarter profit
expectation, even though sales missed.
Read: UPS fires warning shot across the bow of the stock market
and the Fed
(http://www.marketwatch.com/story/ups-fires-warning-shot-across-the-bow-of-the-stock-market-and-the-fed-2015-07-28)
Freeport-McMoRan Inc.(FCX) surged 8.4% after it announced a plan
to review its mining and oil and gas operations to reduce spending
and costs in response to weak market conditions. The stock lost
nearly half its value since the beginning of the year.
Shares of Pfizer Inc.(PFE) climbed 2.9% after the drug maker
reported second-quarter earnings ahead of analyst estimates.
Ford Motor Co.(F) added 1.9% after the car maker's
second-quarter revenue beat forecasts.
Shares of Baidu Inc.(BIDU) slumped 15% after the Chinese online
portal late Monday reported earnings that missed forecasts
(http://www.marketwatch.com/story/baidu-profit-rises-but-forecast-misses-2015-07-27).
Read more in today's Movers & Shakers column
(http://www.marketwatch.com/story/ford-ups-and-twitter-earnings-in-tuesday-focus-2015-07-27).
Other markets: European stock markets rose almost across the
board (http://www.marketwatch.com/storyno-meta-for-guid),
recovering from the China-spurred selloff on Monday. Gold futures
(http://www.marketwatch.com/story/gold-dips-lower-as-survey-points-to-shrinking-demand-2015-07-28)
ended marginally lower at $1,096.20. Crude oil prices
(http://www.marketwatch.com/story/oil-falls-hurt-by-reports-on-rigs-iraq-exports-2015-07-28)
settled higher for the first time in five sessions at$47.98 a
barrel.
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