Stock market stages major rally
The US stock market surged back on Wednesday, snapping a week of sharp drops. The media consensus is that a combination of a strong US economic report, the prospect of the Fed delaying rate increases, and intervention by the Chinese government reassured investors.
USA Today (8/27, Shell, Spitzer) reports that the Dow Jones Industrial Average “rallied sharply late in the session, closing up 619.07 points, or 4%, to 16,285.51.” Unlike Tuesday, the market rally “stuck this time because more good news was released about the US economy” and a Fed member “hinted that a interest rate hike might not be coming in September as feared and Wall Street was more convinced that Chinese authorities would do more to stimulate its shaky economy.”Reuters (8/27, Randewich) reports that the S&P 500 was up 3.9 percent to 1,940.51, while the Nasdaq Composite Index gained 4.24 percent to close at 4,697.54.
The Los Angeles Times (8/27, Peltz) reports that traders “said shares were helped in part by a Commerce Department report that showed US orders for durable goods” were strong in July. The Washington Post (8/27, Marte, Rauhala) reports that “despite growing worries about the slowdown in China,” investors were mollified, “at least temporarily,” by “positive economic reports in the United States, news that China increased market stimulus and predictions that the market turmoil may prompt the Federal Reserve to extend its easy-money policy.”
In a somewhat negative report, the Wall Street Journal (8/27, Driebusch, Albanese, Subscription Publication) notes the increase, but says that traders remain skeptical that the positive market action could be sustained in the wake of Chinese weakness.
In a report from before the market closed, the New York Times (8/27, Gough, Jolly, Subscription Publication) reports that the “volatility in global markets continues to be driven by fears about China’s weakening growth and the ability of its leadership to handle a slowdown in the world’s second-largest economy, after the United States.” However, “as the turmoil continues, questions include how much of the buying and selling of global stocks is based on companies’ actual exposure to China, and how much is a result of other market dynamics.”