US stocks rebounded from selloff bolstered by an unexpected stimulus by China’s central bank and better than expected first quarter corporate earnings in the US.
Morgan Stanley gained more than 0.8% after reporting bits highest adjusted first quarter revenue in more than 5 years while toy maker Habro Inc jumped more than 9% after posting better than expected first quarter earnings estimates.
The S&P 500 index advanced by 19 points or 0.9% to 2100 points to complete a rebound its biggest drop in more than three weeks on Friday.
The Dow Jones Industrial Average advanced more than 225 points or 1.3% to 18063 points having gained 250 points at some point during. The blue-chip index is now on track for its first 1% gain since March 30.
“We had a pretty negative day on Friday, and it’s not uncommon to see a bounce after a selloff like that,” Randy Frederick, managing director of active trading and derivatives at Charles Schwab, told CNBC.
The technology heavy Nasdaq Composite advanced by 44 points or 0.9% to 4876to rebound from Friday’s Greece-jitters’ fueled selloff.
China’s central bank announced before the start of trading that it was freeing up more than $200 billion for banks to lend ad that it would cut its reserve requirement by at least one percentage point.
This is the second time that the People’s Bank of China is reducing the requirement in less than three months and it is its biggest reduction since the global economic meltdown in 2008.
The news, aimed at bolstering the country’s economy which was showing signs of slowing, was welcomed by investors with most major indexes globally recording notable gains.
“People are certainly stepping in and dipping their toe in the water here,” Larry Weiss, head of trading at Instinet told the Wall Street Journal. “There’s this general sense in the market over the past couple of years that people don’t want to miss the rally.”
Investors have also been encouraged that earnings reports have largely been “in line with lowered expectations,” he said.
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