U.S. stocks rallied, using the Dow Jones Industrial Average clawing back a number of Wednesday’s selloff, as oil’s advance beyond $31 a barrel bolstered energy producers and helped stabilize global markets rattled by concerns over China and sliding commodity prices.
The Standard & Poor’s 500 Index gained the most in almost six weeks amid speculation its 6 percent slump in 2016 was overdone. Gas and oil equities drove the rebound, surging more than 4 per cent as investors’ appetite for riskier investments received support from Federal Reserve Bank of St Louis chief James Bullard, who said the rout in energy prices may dent inflation expectations. The dollar advanced, while haven assets from Treasuries to gold and the yen retreated. Nickel and aluminum led a rally in industrial metals.
Crude’s stabilization above the US$30 level burnished sentiment inside a market battered through the worst begin to a year on record for global equities and lingering anxiety over China’s capability to manage its currency and slowing economy. Bullard’s comments tempered expectations for an additional interest-rate hike in the U.S. and JPMorgan Chase & Co.’s earnings beat estimates, combining with technical signals that selling had gone too far to support gains within the U.S. session. Treasuries erased gains amid weaker demand at an auction from the securities, while gold’s advance faded within the latter 1 / 2 of the day.
“This may be the relief rally we’ve been awaiting,” said Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird, which oversees $110 billion. “Pessimism had grown to such a level that enough cash have been raised on the sidelines to aid at least a short-term rally. Better-than- expected earnings could be something for that bulls to understand and supply this rebound some sustainability.”
The S&P/TSX composite index ended the day up 165.62 points at 12,336.03, though it remains beaten down from heavy losses suffered over the last two weeks, together with a 200-point loss on Wednesday.
The loonie was locked below 70 cents U.S. all day long, losing .08 of a cent to end trading at 69.63 cents U.S.
The S&P 500 climbed 1.7 percent to at least one,921.84 by 4 p.m. in New York, after sliding on Wednesday past 1,900, a level its closed below only five times previously 14 months. Small-cap shares rebounded using their lowest point in 2 1/2 years, while Chevron Corp. posted the largest gain in the Dow with a 5.1 per cent surge, probably the most since August.
U.S. benchmarks tumbled with stocks around the world to begin 2016 as steep losses in Chinese equities and an effective devaluation from the yuan unsettled traders. The S&P 500’s plunge on Wednesday triggered a technical signal that indicates it’s oversold. The gauge’s relative strength index, which measures whether gains or losses have been too quickly to sustain, fell below 30, a threshold indicating a rebound may be imminent. The last time the RSI was that low was on Aug. 25, when the S&P 500 hit a bottom and rallied 6.5 per cent over the next 72 hours.
The MSCI All-Country World Index climbed 0.2 percent on Thursday, rising for just the 2nd day since Jan. 4.
JPMorgan rose 1.5 per cent after posting fourth-quarter profit that exceeded analysts’ estimates amid lower expenses. Best to buy Co. sank 9.7 per cent and GoPro Inc. tumbled 15 % after reports showing disappointing holiday sales.
The Stoxx Europe 600 Index declined 1.5 per cent, paring losses of as much as 3.3 percent, while selloffs from Japan to Australia drove the MSCI Asia Pacific Index down 1.7 per cent to the lowest level since November 2012.
– With the help of Inyoung Hwang, Mark Shenk, Lananh Nguyen and Emma O’Brien.