Stocks rebound as ‘Black Monday’ turns into ‘Turnaround Tuesday’

August 26 01:53 2015

U.S. stocks jumped Tuesday as Wall Street rebounded some from Monday’s 588-point drop in the Dow in a stock market rout that sent all the major indexes into official correction territory. Investors were encouraged after five days of intense selling as China cut interest rates for the fifth time since November in an effort to boost its slowing economy. Fears of turmoil in the the world’s second-largest economy has spooked markets worldwide and triggered a global sell off. Traders also were in search of bargains after the recent bloodbath, a sell off that put large swaths of the market in a deeply oversold state.1215-stock-market_full_600

“In what’s being dubbed ‘Turnaround Tuesday,’ the Dow is soaring today — up nearly 450 points at its session peak — paring a big portion of Monday’s mind-boggling losses and reclaiming a foothold atop 16,000,” Karee Venema, analyst at Schaeffer’s Investment Research, told clients in a research note. At around 2:30 p.m. ET, the Dow Jones industrial average was up about 250 points, or 1.6%. The Standard & Poor’s 500 index gained 1.5% and the Nasdaq composite index gained 2.2%.

“What a difference a day makes,” Paul Hickey, co-founder of Bespoke Investment Group told clients in a report before today’s opening bell. Monday, the Dow — which was briefly down more than 1,000 points — finished with its second drop of more than 500 points in as many days.The Dow had lost more than 1670 points in five days. The broader Standard & Poor’s 500-stock index tumbled into official correction mode for the first time since 2011.

Tuesday’s rebound rally was broad-based as nine of the 10 sectors of the S&P 500 were higher. Utilites were the only losing sector. Heading into today’s session Wall Street pros interviewed by USA Today ticked off five things needed for the market to stabilize. The first was more monetary stimulus from China. Other so-called “shock absorbers” were the Fed holding off on interest rate hikes, oil prices bottoming out, pricey stocks getting less pricey and continued signs of strong economic growth in the U.S.