LONDON: A slowdown in China’s stock market along with better-than-expected earnings reports proved enough to spark a relief rally on Wall Street Tuesday, helping snap a five-day losing streak in the main U.S. indexes.
Investors brushed off softer economic reports, while focusing on the two-day Federal Reserve meeting, which kicked off on Tuesday and concludes Wednesday with a policy statement.
The S&P 500 index DJIA, +1.09% added 25.61 points, or 1.2%, to 2,093.25, with the energy and sector leading the gains. The energy sector jumped 3%, following a bounce in oil prices, which settled higher for the first time in five sessions.
The Dow Jones Industrial Average DJIA, +1.09% gained 189.68 points, or 1.1%, to 17,630.27, with 27 of its 30 members finishing higher. Exxon Mobil Corp. XOM, +4.06% share surged 4.1%, while Chevron Corp. CVX, +3.66% rose 3.7%.
The tech-heavy Nasdaq Composite Index COMP, +0.98% added 49.43 points, or 1%, to 5,089.21, as biotechnology stocks rose sharply. The iShares Nasdaq Biotechnology ETF IBB, +2.48% gained 2.5%.
Global equities rebounded on Tuesday as the selloff in the Chinese benchmark after a dramatic 8.5% loss on Monday was more subdued, ending 1.7% lower.
“What investors forget is that China’s stock market is still higher than it was at the beginning of the year,” said Martin Leclerc, chief investment officer and portfolio manager at Barrack Yard Advisors.
“The bigger question is that investors have to get used to the idea that China is transitioning to a consumer-based economy and will grow at a more ‘normal’ 4%-5% pace,” Leclerc said.
