Bulls Stage Late-Session Rally as Stocks Surge

Wall Street awoke from a midday snooze in the final hour of trading, surging to session highs and leading all three major averages to their biggest one-day percentage gains since 2011.

Dow Jones Industrial Average surged 620 points, or 3.96% to 16285. The S&P 500 jumped 72 points, or 3.91% to 1940, while the Nasdaq soared 191 points, or 4.24% to 4697.

All 10 S&P 500 closed in positive territory with information technology leading the way, popping more than 5%.

Today's Markets 

It looks like the second time’s a charm for Wall Street.

The major averages took another stab at a rally on Wednesday and succeeded after strong gains from the prior session were completely wiped out in the final half hour of trading. With Wednesday’s gains, the Dow saw its third-biggest point gain in history.

The late-day surge helped pull both the Nasdaq and S&P 500 out of correction territory, though just barely, while the Dow remains deeply rooted.

U.S. stock-market optimism flew in the face of a global sell off. Chinese equity markets extended a five-day losing streak despite the nation’s central bank announcing Tuesday that it would slash interest rates by 0.25%. Meanwhile the rest of the region was mixed. The Shanghai Composite fell 1.27%, while Hong Kong’s Hang Seng declined 1.52% and Japan’s Nikkei jumped 3.20%.

European equity markets resumed their fall after a one-day rally. The Euro Stoxx 50, which tracks large-cap companies in the eurozone, dropped 1.47%. The German Dax fell 1.29%, the French CAC 40 shed 1.40%, while the UK’s FTSE 100 declined 1.68%.

Clem Miller, portfolio manager at Wilmington Trust, said the mixed messages in the global markets is likely due to investors trying to recalibrate to changes in China and the looming decision on short-term interest rates from the Federal Reserve.

“The markets are taking a look at the overall picture and trying to decide whether this is only about China, or if it’s a broader issue and how much concern the Fed is. Data in the U.S. is looking generally positive, or at least a bulk of it is, and traders are trying to decide, too, whether there are more storm clouds ahead,” he said.

No doubt the U.S. central bank’s movements are under a microscope, especially in America, where FOMC Vice Chairman William Dudley said at a press conference in New York that hiking short-term interest rates is “less compelling” than it was a few weeks ago, but it could become “more compelling” by the time of the FOMC’s September meeting.

Dudley also reiterated the Fed’s long-held view that it will remain dependent on economic data before finalizing a decision to raise rates. He acknowledged the recent volatility in the global financial markets, but said “short-term” volatility won’t have significant implications for continued economic recovery in the U.S., though a “large and prolonged” decline in the stock market could have an impact on U.S. outlook.

Durable goods data from the Commerce Department likely helped give those with a September rate-hike forecast more fuel. The July data showed orders for long-lasting manufactured goods rose 2% for the month, an unexpected gain from the 0.4% drop that was forecast. Excluding the volatile transportation component, orders rose 0.6%, surpassing the 0.4% expected gain. Orders from the prior month were also revised higher.

Looking a bit on the horizon, the data picture in the U.S. will become perhaps more clear on Thursday when the second reading on second-quarter GDP is released alongside pending home sales and weekly jobless claims data.

In commodities, global oil markets found more solid footing, though prices still remained nearly six-and-a-half year lows. U.S. crude declined 1.81% to $38.60 a barrel, while Brent, the international benchmark, shed 0.16% to $43.14 a barrel.

A major deal in the industry was announced on Wednesday when Schlumberger (NYSE:SLB), one of the world’s largest oilfield services companies, said it will acquire oilfield-equipment maker Cameron International (NYSE:CAM) for $14.8 billion. Shares of both companies jumped in pre-market trade.

Gold extended its decline from the prior session, falling 1.19% to $1,124 a troy ounce. Silver plunged 3.87% to $14.05 an ounce, while copper gave up 3.10% to $2.25 a pound.

The yield on the 10-year U.S. Treasury bond rose 0.023 percentage points to 2.156%.

In currencies, the U.S. dollar declined 0.05% against the Chinese yuan, while the euro continued to fall against the greenback, dropping 1.15%.