By Saumya Vaishampayan and Dan Strumpf
U.S. stocks rebounded on Monday from Friday's steep declines,
lifted by upbeat earnings news and an announcement of more stimulus
from China.
The Dow Jones Industrial Average rose 237 points, or 1.3%, to
18063 midmorning. The S&P 500 added 19 points, or 0.9%, to
2100. The Nasdaq Composite Index gained 44 points, or 0.9%, to
4976.
The rebound follows a global selloff Friday that was fueled by
jitters over Greece's finances and a batch of subpar earnings
reports. But the earnings picture improved Monday, while stocks in
Europe posted a recovery as well.
Meanwhile, a move from China's central bank to free up about
$200 billion for banks to lend drew investor attention across the
globe. The People's Bank of China on Sunday announced it would cut
the reserve requirement by one percentage point, its second
reduction in less than a quarter and the biggest since December
2008.
Traders said the news--aimed at shoring up China's slowing
economy--was encouraging to investors here, even as Chinese stocks
declined. At the same time, traders said Friday's downdraft was
sparking interest from some bargain-minded investors, they
said.
"People are certainly stepping in and dipping their toe in the
water here," said Larry Weiss, head of trading at Instinet.
"There's this general sense in the market over the past couple of
years that people don't want to miss the rally."
Investors have also been encouraged that earnings reports have
largely been "in line with lowered expectations," he said.
Morgan Stanley's first-quarter profit and revenue rose, beating
Wall Street estimates, as the bank benefited from a stronger
environment for deals and trading. Shares rose 0.8%.
Hasbro Inc. shares jumped 8.9%, posting the biggest rise in the
S&P 500, after the toy maker posted better-than-expected
revenue and profits, despite negative foreign exchange impact.
European stocks added to the positive tone. Germany's DAX
advanced 1.7% and France's CAC 40 added 0.7%. The Stoxx Europe 600
rose 0.7%, after posting its worst daily loss in three months on
Friday.
Stocks fell Friday, with the Dow declining 1.5% to 17826.30. The
S&P 500 fell 1.1%, to 2081.18, and the Nasdaq Composite lost
1.5% to 4931.81.
Dim expectations for first-quarter earnings have been an
obstacle to stocks in recent weeks, with major indexes stalling
near all-time highs last reached in early March. Analysts expect
first-quarter profits for S&P 500 companies to fall 4.5%,
including the 51 companies that have already reported results,
according to FactSet.
Chinese stocks still fell despite the positive news from China.
Hong Kong's Hang Seng Index posted its biggest one-day decline this
year, while the Shanghai Composite fell 1.6%.
While the Chinese move helped buoy markets in Europe and the
U.S. Monday, it isn't all good news for investors, said Peter
Cardillo, chief market economist at broker-dealer Rockwell Global
Capital.
"It means that the world's economy is subject to even slower
growth, which means the potential for lower future earnings," he
said. Mr. Cardillo said he is expecting a market pullback in the
shorter term, but remains positive on stocks for the year.
Merck & Co. shares rose 1.7% after a study showed positive
results for its new cancer drug Keytruda. Merck also said it has
filed for U.S. regulatory approval to market its drug as a
treatment for lung cancer.
Shares of Halliburton Co. rose 3.6% after the oil-field services
provider reported revenue and earnings that surpassed analyst
expectations.
In commodity markets, gold futures slipped 0.4% to $1198.50 an
ounce. Crude-oil futures rose 2% to $56.84 a barrel, helping to
lift shares of energy companies.
The yield on the 10-year note rose to 1.879% from 1.849% on
Friday. Yields rise as prices fall.
Write to Dan Strumpf at daniel.strumpf@wsj.com and Saumya
Vaishampayan at saumya.vaishampayan@wsj.com
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