(Bloomberg) — U.S. stocks rallied, with the Dow Jones Industrial Average surging 300 points after a 364-point rout yesterday, as crude's advance past $31 a barrel boosted energy shares helped stabilize global markets rattled by China and falling commodity prices.
The Standard & Poor's 500 Index gained the most in six weeks amid speculation the 7.5 percent selloff to start the year had gone too far too fast. Energy stocks surged 4.9 percent, with risk-on sentiment getting a boost from dovish comments by the Federal Reserve's James Bullard. The dollar advanced, while havens from Treasuries to gold slipped.
Crude's ability to hold above $30, Bullard's comments tempering rate-hike expectations, JPMorgan's earnings beat and technical signals that selling had gone too far underpinned the rally in U.S. stocks that had been battered by concern China's slowdown would derail global growth. Treasuries erased gains after an auction saw weaker demand, while gold's surge faded.
"This is the relief rally we've been waiting for," said Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird, which oversees $110 billion. "Pessimism had grown to such a level that enough cash had been raised on the sidelines to support at least a short-term rally. Better-than- expected earnings could be something for the bulls to grasp and provide this rebound some sustainability."
Stocks
The S&P 500 climbed 2.2 percent to 1,930.90 at 3:01 p.m. in New York, after falling Wednesday past 1,900, a level its closed below only five times in the past 14 months. Small-cap shares rebounded from the lowest level in 2 1/2 years, while Exxon Mobil Corp. posted the biggest gain in the Dow with a 5.6 percent surge, the most since August.
U.S. benchmarks tumbled more than 7 percent to start 2016 after ending last year little changed. The S&P 500's plunge yesterday triggered a technical signal that indicates it's oversold. The gauge's relative strength index, which measures whether gains or losses have been too fast to sustain, fell below 30, a threshold indicating a rebound may materialize. The last time the RSI was that low was on Aug. 25, when the S&P 500 hit a bottom and rallied 6.5 percent over the next three days.
JPMorgan Chase & Co. climbed 3.2 percent after fourth- quarter profit beat estimates amid lower expenses. Best Buy Co. sank 9 percent and GoPro Inc. tumbled 16 percent after reports showing disappointing holiday sales.
The Stoxx Europe 600 Index declined 1.5 percent, paring losses of as much as 3.3 percent. European shares are down more than 7 percent since the start of 2016.
Emerging Markets
The MSCI Emerging Markets Index lost 0.9 percent, extending its drop this year toward 9 percent. Gulf stocks slid, with benchmarks in Saudi Arabia and Dubai shedding more than 3.3 percent. Shares in Turkey, South Africa, Poland and the Czech Republic slipped.
The Jakarta Composite Index retreated 0.5 percent after the worst attack in the Indonesian capital since at least 2009. Seven people were killed amid explosions and gunfire, including four attackers, Associated Press reported, citing a police spokesman.
In China, the Shanghai Composite Index jumped 2 percent, after dropping 2.8 percent earlier. The Hang Seng China Enterprise Index of mainland shares fell 0.4 percent, taking its loss for 2016 to 12 percent.
Bonds
Treasuries fell, reversing earlier gains, as a $13 billion sale of 30-year bonds generated lower demand than was seen at a pair of auctions earlier this week. The yield on the 2045 bonds rose two basis points to 2.90 percent, while the 10-year yield dropped added two basis points to 2.11 percent. A sale of 10- year notes on Wednesday was deemed "outstanding" in a survey of five primary dealers conducted by Bloomberg.
