Wall St. opens higher on hopes of Chinese stimulus
China’s imports shrank far more than expected in August, falling for the 10th straight month. Imports fell 13.8 percent from a year earlier, more than the 8.2 percent drop economists had expected.
However, Chinese stocks rose nearly 3 percent on Tuesday as a surge in late-afternoon buying helped erase early losses. Late on Monday, China said it would remove tax on dividend incomes for investors who hold stocks for more than a year in an effort to encourage longer-term investment.
“With volatility having receded somewhat during the past few days it appears that investors have been reassessing the potential negative fallout from the slowdown in China,” said Markus Huber, a senior analyst at Peregrine & Black.
At 9:46 a.m. ET the Dow Jones industrial average .DJI was up 306.56 points, or 1.9 percent, at 16,408.94, the S&P 500 .SPX was up 36.69 points, or 1.91 percent, at 1,957.91 and the Nasdaq Composite .IXIC was up 98.86 points, or 2.11 percent, at 4,782.78.
All the 10 major S&P sectors were higher with the technology index’s 2.15 percent rise leading the advancers. Apple (AAPL.O) shares were up 2.3 percent at $111.82, a day before the iPhone maker is expected to unveil new offerings. The stock was the biggest boost on the S&P and the Nasdaq.
Global financial markets have been rattled in recent weeks by fears that China’s slowdown could drag on already sluggish global growth, prompting some investors to bet that the U.S. central bank will delay a hike until the end of the year.
Wall Street capped a tough week on Friday, with major indexes closing down more than 1 percent, after a mixed August jobs report did little to quell uncertainty about whether the Federal Reserve will increase interest rates this month.
Following Friday’s employment data, futures market traders predicted about a 20 percent chance a rate hike will come this month, down from around 30 percent before the jobs report.
Nonfarm payrolls increased by 173,000 last month, fewer than the 220,000 that economists polled by Reuters had expected. But the unemployment rate dropped to 5.1 percent, its lowest in more than seven years, and wages accelerated.
The Fed has said it will raise rates for the first time in nearly a decade when it sees a sustained recovery in the economy. While the labor market has strengthened, inflation remains below the 2 percent target.
Data on Tuesday showed U.S. small business confidence rose modestly in August, suggesting the economy continued to grow at a steady clip halfway through the third quarter.
Federal Reserve Bank of Minneapolis President Narayana Kocherlakota is expected to speak at an event later in the day in Evanston, Illinois.
Fitbit (FIT.N) was up 11.8 percent at $35.62 after Morgan Stanley upgraded the stock to “overweight”.
Alibaba (BABA.N) was up 2.9 percent at $65.81 after German retailer Metro (MEOG.DE) said it will use Alibaba’s Tmall Global platform to offer a range of German products online to Chinese consumers.
Media General (MEG.N) rose 6.3 percent to $11.83 after it said it would buy diversified media company Meredith Corp (MDP.N) for about $2.34 billion to create the third-largest local TV station owner in the United States. Meredith was up 10.8 percent at $50.89.
Advancing issues outnumbered decliners on the NYSE by 2,432 to 329. On the Nasdaq, 2,156 issues rose and 373 fell.
The S&P 500 index showed one new 52-week high and no new lows, while the Nasdaq recorded 23 new highs and six new lows.