Advertisement
This Article is From Jul 09, 2015

Wall Street Rallies as Chinese Stocks Recover

US stocks rose on Thursday as trading returned to normal at the New York Stock Exchange (NYSE) and Beijing's efforts to halt a rout in Chinese stocks lifted markets around the world.

US stocks had fallen sharply on Wednesday as market turmoil in China, a rout in commodity prices, the Greek crisis and a major outage on the New York Stock Exchange spooked investors.

While the NYSE resumed operations late in the trading day on Wednesday, all eyes were on the exchange to see if its systems would withstand heavy opening trade volumes.

"NYSE open for trading, business as usual," the exchange tweeted shortly after the opening bell. NYSE accounted for about 13.4 per cent of US stocks last month.

Boosting investor sentiment, minutes from the Federal Reserve's June meeting indicated that the US central bank needed to see more signs of a strengthening economy before raising rates.

A hike in interest rates increases the cost of borrowing, crimping corporate profit margins. The Fed has kept interest rates near zero since the 2008 financial crisis.

"We're seeing some selling fatigue because the fall in the past few days have been quite indiscriminate. The Chinese market is pretty isolated and for all intents and purposes is a domestic casino," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

China's securities regulator, in its most drastic step yet to arrest a selloff on Chinese stock markets, banned shareholders with large stakes in listed firms from selling for the next six months.

About 30 per cent has been knocked off the value of Chinese shares since mid-June. Some investors fear that the turmoil in the Chinese market could destabilize the global financial system, making it a bigger risk than the Greek crisis.

The Dow Jones industrial average was up 152.33 points, or 0.87 per cent, at 17,667.75, the S&P 500 was up 16.91 points, or 0.83 per cent, at 2,063.59 and the Nasdaq Composite was up 48.80 points, or 0.99 per cent, at 4,958.56.

Nine of the 10 major S&P 500 sectors were higher, with the financial index leading the gains with a 1.25 per cent rise. The major US banks are scheduled to report earnings next week.

New applications for US unemployment benefits rose last week to their highest rate since February with initial claims rising 15,000 to a seasonally adjusted 297,000 for the week that ended July 4.

European markets rose on hopes that Greece might be able to win a deal that could keep it in the euro zone. Greek Prime Minister Alexis Tsipras has until midnight to propose spending-cut plans.

US quarterly earnings season kicked off with Alcoa's quarterly profit missing expectations due to plunging primary aluminum prices.

Corporate profits are expected to have fallen 3.1 per cent in the second quarter, according to Thomson Reuters estimates data.

Coty's shares fell 5.9 per cent to $29.66 after Procter & Gamble agreed to sell its beauty business to the company in a deal that values the business at $12.5 billion. P&G shares were up marginally at $81.08.

Walgreens Boots Alliance was up 4.2 per cent at $89.50 after the largest US drug store chain raised its full-year profit forecast.

Advancing issues outnumbered decliners on the NYSE. On the Nasdaq, 1,999 issues rose and 602 fell.

The S&P 500 index showed eight new 52-week highs and three new lows, while the Nasdaq recorded 23 new highs and 28 new lows.
© Thomson Reuters 2015
Listen to the latest songs, only on JioSaavn.com