NEW YORK (BLOOMBERG) - The rout in global stocks let up, with US equities halting a two-day slump after Chinese shares ended their last day of trading this week with the smallest loss since mid-August. The dollar US rose, while Treasuries fell.
Stocks retreated worldwide the previous two days as concern China will hamper growth around the globe was revived. US reports on Wednesday (Sept 2) bolstered optimism in the American outlook, and with China stepping into the background for a two-day holiday attention is turning to Friday's payrolls report, which may have bearing on the Federal Reserve's timeline for raising interest rates.
"China's going to be closed the next few days and that means there won't be this negative lead-in to markets in the morning so that will be a nice reprieve," Stephen Carl, principal and head equity trader at Williams Capital Group LP, said by phone. "The date for a potential rate raise is certainly going back and forth and with the recent volatility in the market and situation overseas, people don't have much conviction on when it will be."
The Standard & Poor's 500 Index ended Wednesday up 1.8 per cent in New York, extending gains in the final 30 minutes of trading to close at session highs. The Stoxx Europe 600 Index added 0.3 per cent, while equities in Shanghai erased most of Wednesday's 4.7 per cent drop, ending the session down 0.2 per cent as state funds intervened.
West Texas Intermediate crude rebounded from a two-day pullback. The Bloomberg Dollar Spot Index rose 0.3 per cent and yields on 10-year Treasury notes added three basis points to 2.19 per cent.
The Fed's Beige Book released Wednesday indicated the U.S. economy expanded across most regions and industries in the past two months, based on reports gathered on or before Aug. 24. Friday's report on nonfarm payrolls in the world's largest economy will provide the last major data point before Fed policy makers meet from Sept. 16-17.
The Dow Jones Industrial Average jumped 293 points, or 1.8 per cent, after plunging 469 points on Tuesday.
The S&P 500's 3 per cent selloff Tuesday was its third-worst of 2015, trailing losses incurred on Aug. 21 and Aug. 24. Concern that a slowdown in China will curb global growth deepened after data pointed to weakness in Europe and the slowest factory expansion in the US in two years.
While a report from the ADP Research Institute Wednesday saw a smaller increase in payrolls than economists had projected, the number was "decent" and should it be an indicator of Friday's data, the market is in for a "pretty good, not great, Goldilocks-like number," said Eddie Perkin, chief equity investment officer at Eaton Vance Corp., which oversees US$311 billion.