Stocks close sharply higher in rebound; Nasdaq out of correction
U.S. stocks closed sharply higher on Wednesday, partly recovering from the worst start to September in 13 years, as investors eyed calmer global markets, domestic data, and oil prices. ( Tweet This)
The major averages rallied more than 1.5 percent in the close to end near session highs, with the Nasdaq composite outperforming with gains of 2.46 percent to pull out of correction territory.
The S&P 500 held out of correction territory, while the Dow Jones industrial average remained in correction. The blue chip index ended three straight days of losses with a gain of 293 points. Apple(AAPL) surged 4.29 percent and Microsoft (MSFT)leaped 3.68 percent to lead nearly all blue chips higher, while information technology led all S&P sectors higher.The iPhone maker’s stock attempted gains for 2015 but remained in correction territory. Energy turned mildly higher as crude oil recovered to settle up 1.85 percent at $46.25 a barrel. Earlier, crude fell as much as 4 percent to below $44 a barrel after the U.S. Energy Information Administration’s weekly report showed oil inventories rose. “I think that the stock market has been trading in concert with oil prices,” said Kim Forrest, senior equity analyst at Fort Pitt Capital. After a recent rally, crude settled 7.7 percent lower on Tuesday. Read More This popular indicator says stocks have bottomed Earlier, the major averages held gains of about 1 percent or more after the Federal Reserve’s latest Beige Book said economic activity continued to expand. “I’m a little disappointed by the Beige Book. I was looking for more robust signs of growth,” said Tara Sinclair, chief economist at Indeed. “It does make me wonder whether there’s still room for the economy to grow.” The larger factor for investors on the timing of a rate hike remains Friday’s nonfarm payrolls report. “I think more or less what we see is markets digesting last week’s rally. Problem is, we’re in the lower part of the range,” said Adam Sarhan, CEO of Sarhan Capital. The Beige Book is just “one piece of the puzzle” on determining the timing of a rate hike. Treasury yields were little changed following the report, with the 10-year yield (U.S.:US10Y) at 2.19 percent and the 2-year yield (U.S.:US2Y) holding near 0.72 percent in choppy trade. The U.S. dollar traded higher against major world currencies, with the euro near $1.12 and the yen near 120 yen against the greenback. Trade was choppy throughout the day, with the major averages briefly halving sharp opening gains of about 1 percent. “It appears that fewer people are willing to jump in and bottom fish,” said Jack Ablin, chief investment officer at BMO Private Bank. “The reason we’re selling off is there are still sellers in the market who also want to raise cash,” said Marc Chaikin, CEO of Chaikin Analytics. “They don’t want to do it on weakness like we saw Monday afternoon or Tuesday. … To me that suggests we are going to head lower.”
He also noted some encouraging signs in the consumer sector from Vera Bradley (VRA)earnings, which came out before the bell.
The handbag and accessories maker reported better-than-expected second-quarter revenue, helped by new products and marketing, Reuters reported. The firm also forecast third-quarter earnings from continuing operations and revenue above analysts’ estimates.
In other corporate results before the bell, Ambarella (AMBA) reported adjusted quarterly profit of 88 cents per share, beating estimates of 80 cents, while revenue was also above forecasts. However, the maker of video processing chips is seeing its shares under pressure, following a report warning of possible risks to GoPro (GPRO)‘s third quarter results. Ambarella is one of GoPro’s key suppliers.H&R Block (HRB) posted a loss of 35 cents per share, 5 cents less than analysts had anticipated. Revenue beat estimates, and the company also announced a $3.5 billion stock buyback program. Five Below (FIVE) and Planet Fitness (PLNT) are both due to report after the bell. Read More Early movers: HAS, BBT, GIS, T, NAV, CBS, PM, HRB, AMBA & more
The Dow Jones Industrial Average (Dow Jones Global Indexes: .DJI) closed up 293.03 points, or 1.82 percent, at 16,351.38, with Apple leading all blue chips higher except Chevron (CVX).
The S&P 500 (^GSPC) closed up 35.01 points, or 1.83 percent, at 1,948.86.
The Nasdaq (^IXIC) closed up 113.87 points, or 2.46 percent, at 4,749.98.
The Dow transports jumped 2.45 percent, with JetBlue (JBLU) surging 6.4 percent to lead all constituents higher.
The CBOE Volatility Index (VIX) (^VIX), widely considered the best gauge of fear in the market, traded near 26.
About three stocks advanced for every decliner on the New York Stock Exchange, with an exchange volume of nearly 1.1 billion and a composite volume of 3.7 billion in the close.
Gold futures for December delivery settled down 46.20 at $1,133.60 an ounce.
–CNBC’s Peter Schacknow contributed to this report.