US stocks surge after China cuts rates to help economy - KSWO 7News | Breaking News, Weather and Sports

US stocks surge after China cuts rates to help economy

By ALEX VEIGA
AP Business Writer

U.S. stocks surged in early trading Tuesday after China's central bank cut its key interest rate in a bid to boost growth in the world's second-largest economy.

The move erased some of the stock market's heavy losses from a day earlier when concerns over a slowdown in China's economy rattled global markets and knocked down the Dow Jones industrial average more than 588 points.

The Dow was up 349 points, or 2.2 percent, to 16,221 as of 10:18 a.m. Eastern time, while the Standard & Poor's 500 index gained 45 points, or 2.4 percent, to 1,938. The Nasdaq composite rose 137 points, or 3 percent, to 4,664.

The three indexes closed lower three days in a row as investors wrestled with uncertainty over increased signs of a slowdown in China's economy and the timing of a long-expected interest rate hike by the Federal Reserve.

Investors also welcomed encouraging government data indicating that U.S. consumer confidence rebounded this month. A separate report showed sales of new U.S. homes bounced back in July.

China cut its interest rates for the fifth time in nine months in a renewed effort to shore up economic growth. The central bank lowered the benchmark rate for a one-year loan by 0.25 percentage points to 4.6 percent and the one-year rate for deposits by a similar margin to 1.75 percent.

The bank also increased the amount of money available for lending by reducing the minimum reserves banks are required to hold by 0.5 percentage points.

The move came as Beijing appeared to be abandoning a strategy of having a state-owned company buy shares to stem the market slide.

Analysts say that while Tuesday's actions by the central bank may calm the stock market turmoil for now, the country faces a long period of uncertainty that will create more volatility.

"The Chinese economy is going to be on this bumpy road for a while and it will have ebbs and flows that will no doubt have a serious impact on the global economy," said Kamel Mellahi, professor at the Warwick Business School.

"What we are seeing now is a dress rehearsal of things to come."

European markets recovered almost all their losses from Monday.

Germany's DAX jumped 4.3 percent, while the CAC-40 in France rose 3.9 percent. The FTSE 100 index of leading British shares rose 2.6 percent.

China's central bank took action hours after the country's main stock index closed sharply lower for a fourth day. The Shanghai stock index slumped to close 7.6 percent lower - adding to Monday's 8.5 percent loss and taking the benchmark to its lowest level since Dec. 15.

Tokyo's Nikkei 225 also closed lower, sliding 4 percent after sliding 4.6 percent Monday.

But other markets in Asia posted modest recoveries. Hong Kong's Hang Seng index rose or 0.7 percent, while Sydney's S&P ASX 200 gained 2.7 percent and Seoul's Kospi index and Singapore's Straits Times index also rose.

In currency markets, the dollar rose to 119.66 yen from Monday's 118.69 yen. The euro fell to $1.1465 from the previous session's $1.1591

Oil rebounded from Monday's steep declines.

Benchmark U.S. crude gained $1.04 to $39.25 per barrel in New York. The contract plunged $2.21 on Monday to close at $38.42.

U.S. government bond prices fell, pushing up the yield on the 10-year Treasury note to 2.09 percent.

___

AP Business Writer Joe McDonald in Beijing contributed to this story.

Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

  • Local NewsNewsMore>>

  • UK police think boy, 3, was attacked with acid at store

    UK police think boy, 3, was attacked with acid at store

    Sunday, July 22 2018 11:04 AM EDT2018-07-22 15:04:24 GMT
    Sunday, July 22 2018 4:34 PM EDT2018-07-22 20:34:55 GMT
    A general view of the Home Bargains store where a man is accused of an acid attack on a young boy, in Worcester, England, Sunday. British police say a 3-year-old boy suffered severe burns on his face and arm. (Matthew Cooper/PA via AP)A general view of the Home Bargains store where a man is accused of an acid attack on a young boy, in Worcester, England, Sunday. British police say a 3-year-old boy suffered severe burns on his face and arm. (Matthew Cooper/PA via AP)

    British police say a 3-year-old boy suffered severe burns on his face and arm during a suspected acid attack that investigators think was deliberate.

    British police say a 3-year-old boy suffered severe burns on his face and arm during a suspected acid attack that investigators think was deliberate.

  • Survivor recounts boat accident that killed 9 family members

    Survivor recounts boat accident that killed 9 family members

    Saturday, July 21 2018 12:18 AM EDT2018-07-21 04:18:54 GMT
    Sunday, July 22 2018 4:26 PM EDT2018-07-22 20:26:27 GMT
    (AP Photo/Charlie Riedel). People pray outside Ride the Ducks, an amphibious tour operator involved in a boating accident on Table Rock Lake, Friday, July 20, 2018 in Branson, Mo.(AP Photo/Charlie Riedel). People pray outside Ride the Ducks, an amphibious tour operator involved in a boating accident on Table Rock Lake, Friday, July 20, 2018 in Branson, Mo.

    More than half of the 17 people killed when a tourist boat sank on a Branson lake were members of the same Indiana family, and they likely wouldn't have been on the ill-fated trip but for a ticket mix-up.

    More than half of the 17 people killed when a tourist boat sank on a Branson lake were members of the same Indiana family, and they likely wouldn't have been on the ill-fated trip but for a ticket mix-up.

  • Gunman in LA supermarket standoff arrested for murder

    Gunman in LA supermarket standoff arrested for murder

    Sunday, July 22 2018 8:49 AM EDT2018-07-22 12:49:27 GMT
    Sunday, July 22 2018 4:26 PM EDT2018-07-22 20:26:00 GMT
    (AP Photo/Damian Dovarganes). Los Angeles Police SWAT officers escort a group of people who were held for their safety by police across businesses surrounding a Trader Joe's supermarket, after a gunman held dozens of people hostage inside the store bef...(AP Photo/Damian Dovarganes). Los Angeles Police SWAT officers escort a group of people who were held for their safety by police across businesses surrounding a Trader Joe's supermarket, after a gunman held dozens of people hostage inside the store bef...

    Police say they're trying to determine what prompted a man to shoot his grandmother and then run into a busy Los Angeles supermarket and hold dozens of people hostage for hours.

    Police say they're trying to determine what prompted a man to shoot his grandmother and then run into a busy Los Angeles supermarket and hold dozens of people hostage for hours.

Powered by Frankly