U.S. stocks jumped in the open on Wednesday, attempting for a second day to bounce from a recent plunge, as investors eyed stimulus moves out of China and U.S. data.
“It looks just like yesterday at this time where things are weaker (in) general overseas, but people look optimistic at the open,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab.
“Overseas, the Chinese markets are still down. I don’t think that’s a huge deal but people seem to think it does,” he said.
The New York Stock Exchange invoked Rule 48 for a third straight session, after implementing the rule on Monday and Tuesday for the first time since the financial crisis, Dow Jones reported. The goal of the rule is to ease market volatility.
Futures extended gains, with the Dow indicating a higher open, briefly rising more than 350 points and implying a plus-450 point open.
Overnight, China’s central bank said it had injected 140 billion yuan ($21.8 billion) into the interbank money market via short-term liquidity operations (SLOs). However, China’s benchmark Shanghai Composite finished down 1.3 percent after fluctuating throughout the day.
The Peoples’ Bank of China fired a double-barrelled easing shot on Tuesday—lowering interest rates and the reserve requirement ratio (RRR) by 25 basis points and 50 basis points respectively—but this was not enough to reassure markets of slowing growth fears.
“Investors are still pretty cautious about this rally,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
He viewed the Dow futures’ implied 400-point open as “acting suspiciously.” “This is an opportunity to lighten up on positions you didn’t get to yesterday,” he said.
Stocks bounced nearly 3 percent or more in early trade Tuesday but failed to hold gains, with the Dow and S&P closing more than 1 percent lower and the Nasdaq also in the red.
In the last week-and-a-half, the S&P 500 has lost nearly $2 trillion in market capitalization, with $900 billion lost in this week’s two trading sessions alone.
On the data front in the U.S., durable good orders for July rose 2.2 percent, above the expected 0.1 percent rise, but down from the 3.4 percent gain last month.
The services PMI is due later in the morning. New York Federal Reserve President William Dudley will speak at 10:00 a.m. ET on the regional economy.
On tap this week:
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
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
8:30 a.m.: Personal income
10 a.m.: Consumer sentiment
12:25 p.m.: Fed Vice Chairman Stanley Fischer at Jackson Hole; topic U.S. inflation