US stocks ended higher to halt a five day slide, the longest losing streak since January, on better than expected second quarter earnings and a rally in Chinese stocks after Monday’s selloff.
The Dow Jones Industrial Average added 189.9 points or 1.1% in normal trading to end at 17,630.27 with about 27 of its 30 components finishing higher.
The benchmark S&P 500 Index ended 25.12 points or 1.2% higher at 2,093.25 points. All ten sectors of the benchmark index ended higher with the energy sector leading gains with a 3.1% advance.
The Nasdaq Composite added 49.43 points or 1% to end at 5,089.21 points on a sharp rise in biotechnology shares.
“China slowed the big selloff it saw yesterday, and that’s lifting the U.S. market,” Terry Morris, a senior equity manager who helps oversee about $2.8 billion at Wyomissing, Pennsylvania-based National Penn Investors Trust Co, told Bloomberg.
“Reported earnings have been OK so far, and we’ll get a lot more reports to digest as the week goes along.”
Giant pharmaceutical company Pfizer jumped 2.9% while United Parcel Service added 5% after their profits beat projections.
Energy and commodity stocks also rallied after a slump last week with Freeeport McMoran leading raw material producers after copper prices rallied.
Investors brushed off softer economic reports, however, with Baidu Inc ending 15% lower after its sales forecast failed to meet analysts’ expectations while Ingersoll Rand plc ended 6.6% after its earnings failed to meet estimates.
Also aiding the rally in equities was a slowdown in Chinese equities’ selloff with the benchmark Shanghai Composite ending moderately lower at 1.7% in comparison with the 8.5% slump on Monday.
“What investors forget is that China’s stock market is still higher than it was at the beginning of the year,” Martin Leclerc, chief investment officer and portfolio manager at Barrack Yard Advisors, told Market Watch.
“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”.
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