U.S. stocks pared a rebound, after the Standard & Poor’s 500 Index posted one of its steepest drops this year, as energy shares retreated with oil amid a respite from a global equities selloff.
The S&P 500 Index rose 0.5 percent to 1,922.89 at 10:33 a.m. in New York, after earlier climbing as much as 1.3 percent. The gauge fell 3.8 percent over the previous two sessions.
“China’s going to be closed the next few days and that means there won’t be this negative lead-in to markets in the morning so that will be a nice reprieve,” said Stephen Carl, principal and head equity trader at Williams Capital Group LP. “The date for a potential rate raise is certainly going back and forth and with the recent volatility in the market and situation overseas, people don’t have much conviction on when it will be.”
The benchmark equity gauge’s 3 percent decline on Tuesday -- its third-biggest of 2015 -- marked a sour start to what has historically been the worst month of the year. The S&P 500 falls 1.1 percent on average in September, according to data compiled by Bloomberg going back to 1927.
Another troubling sign is that futures on Chicago Board Options Exchange Volatility Index have climbed, showing traders predict turbulent markets will endure. The gauge known as the VIX fell 5 percent Wednesday to 29.84, after a record monthly jump in August,up 135 percent.
The S&P 500 slumped 6.3 percent in August as China’s currency devaluation spurred concern over global growth, erasing more than $5.7 trillion in equity market values worldwide, whilevolatility surged the most on record. The equity index entered a correction last week, only to then rally more than 6 percent over two days. It closed Tuesday 10 percent below its all-time high set in May.
CBOE VIX Volatility Index
Chinese shares closed lower on the last trading day of this week as investors assessed the level of state support before a major military parade on Thursday. Mainland markets will be closed Thursday and Friday to commemorate the end of World War II.
“Volatility will stay high for a while,” said Teis Knuthsen, chief investment officer at Saxo Bank A/S’s private-banking unit in Hellerup, Denmark. “China is still making people panic and a lot of us are concerned that we’ll break the lows from last week. But many companies are starting to look very cheap now and the market will eventually find a support level, especially if the Fed doesn’t raise rates this month.”
Amid continuing concerns that China’s slowdown will weigh on the global economy, traders are now pricing in a 34 percent chance that the Federal Reserve will raise interest rates this month, down from 38 percent on Monday. Policy makers have a little more than two weeks to assess incoming data before deciding whether to increase rates.
A report today on private payrolls showed companies added 190,000 workers in August, below the 200,000 forecast by economists surveyed by Bloomberg. Attention will focus on the government’s monthly jobs report, due Friday, as a major data point before the Fed’s meeting. A separate gauge Wednesday showed July factory orders rose 0.4 percent, less than the 0.9 percent growth forecast by economists. June orders grew 2.2 percent, revised up from a previously reported 1.8 percent.
source: Bloomberg
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