S&P 500 leaps 2% in open after selloff

Brendan McDermid | Reuters Trader on the floor of the New York Stock Exchange.

Brendan McDermid | Reuters
Trader on the floor of the New York Stock Exchange.

U.S. stocks jumped in the open on Tuesday, attempting a bounce after the Dow’s worst three-day drop in history, as a recovery in oil prices and overnight easing in China helped investor sentiment.

Stocks surged in the open, with the Nasdaq outperforming, briefly up 3.5 percent. The Dow jumped more than 300 points with Apple and JPMorgan Chase leading all blue chips higher.

“Bothering markets yesterday were China and collapsing commodity prices and both of those have given us some relief and when I look at China I don’t look at the Shanghai market. I look at the Hong Kong market,” said James Meyer, chief investment officer at Tower Bridge Advisors.

The Hang Seng closed up 0.72 percent, while the Nikkei plunged 4 percent and the Shanghai Composite extended recent losses to fall below the psychologically key 3,000 mark, down 7.6 percent.

Oil prices surged, with crude up more than 3 percent near $39.50 a barrel. Brent also jumped more than 3 percent to above $44 a barrel.

U.S. stock index futures extended gains after the Chinese central bank announced plans early in the morning ET to cut its one year lending rate to 4.6 percent, which the People’s Bank of China said was provide long-term liquidity and help support the economy.

Read More More selling ahead but bull market ‘not dead yet’

“I’m looking for every reason to be a buyer,” said Nick Raich, CEO of The Earnings Scout, who remains bearish on equities. “We’re not upgrading our view at this point until we see topline growth… until then it’s going to be hard to sustain a rally.”

In early trade Tuesday, Dow futures spiked above 600 points, implying an open of more than 450 points.

For the rally to be real “if this is the bottom we have to end strong and follow-through tomorrow,” Meyer said.

The New York Stock Exchange invoked Rule 48 for the second day in a row, Dow Jones reported.

The exchange used the rule before Monday’s open after futures for several major averages hit limit down. The last time the rule was used was during the financial crisis.

Read More What is Rule 48?

Stocks plummeted on Monday, with the S&P 500 joining the other major averages in correction territory. Nine of the 10 sectors are in correction territory, with consumer staples less than 1 percent away.

The Dow had its biggest intraday swing ever, falling as much as 1,089 points in the open on Monday. U.S. stocks closed more than 3.5 percent lower, off session lows in high volume trade as fears of slowing growth in China pressured global markets.

Cumulative trade volume was 13.94 billion shares, the highest volume day since Aug. 10, 2011. Composite trade volume on the New York Stock Exchange was 6.57 billion shares, the heaviest since Oct. 27, 2011.

On the data front, there are a flurry of housing market indicators due Tuesday, with the Case-Shiller home price indices for June showing home prices rose less than expected.

New home sales figures for July at 10.00 a.m. Other releases include the Conference Board’s consumer confidence indicator for August at 10.00 a.m. as well as the flash Markit services and composite PMIs for the same month.

Symbol
Name
Price
Change
%Change
DJIA Dow Jones Industrial Average 16248.29
376.94 2.37%
S&P 500 S&P 500 Index 1936.86
43.65 2.31%
NASDAQ Nasdaq Composite Index 4659.68
133.43 2.95%

In earnings, Best Buy, Toll Brothers and Sanderson Farms reported before the market open.

Best Buy beat estimates by 15 cents with adjusted quarterly profit of 49 cents per share, with revenue also beating forecasts. Same-store sales rose 2.7 percent, compared to the Thomson Reuters forecast of a 1.0 percent increase.

Luxury homebuilder Toll Brothers reported a 12 percent rise in third quarter orders. Earnings and revenue were roughly in line with estimates, although profits were down from a year earlier.

Poultry producer Sanderson Farms posted earnings that fell substantially shy of the $2.90 consensus estimate with quarterly profit of $2.27, while revenue was also below forecasts. The company said a key factor in the quarter’s results was continued pricing pressure.

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BHP Billiton reported full-year earnings earlier Tuesday which sent shares around 3 percent higher in London. This came despite the mining giant reporting an 86 percent plunge in net profit on the back of falling commodity prices, but investors cheered the group’s cost-cutting measures.

CNBC’s Peter Schacknow contributed to this report

On tap this week:

Tuesday

10 a.m.: New home sales, Consumer confidence

1 p.m.: $26 billion 2-year note auction

Wednesday

8:30 a.m.: Durable goods

9:45 a.m.: Services PMI

10 a.m.: New York Fed President Dudley on regional economy, Q&A

1 p.m.: $35 billion 5-year note auction

Thursday

Jackson Hole Fed symposium begins

8:30 a.m.: Initial claims

8:30 a.m.: Real GDP Q2 (second)

10 a.m.: Pending home sales

1 p.m.: $29 billion 7-year note auction

Friday

8:30 a.m.: Personal income

10 a.m.: Consumer sentiment

Saturday

12:25 p.m.: Fed Vice Chairman Stanley Fischer at Jackson Hole; topic U.S. inflation

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