Market rebounds as the dollar falls

Associated Press

NEW YORK

A decline in the dollar helped fuel a market rebound Wednesday that nearly erased a big-sell off the day before brought on by fears of a slowdown in China.

Stocks had fallen more than 1 percent Tuesday after a surprise interest rate increase in China, the first time the country had raised rates in nearly three years. That made some traders concerned that slower growth in China might put a drag on the global economy.

Some of those concerns were erased after the Shanghai Composite Index, China’s main stock market benchmark, rose slightly in overnight trading. Those gains “helped create a more constructive tone for the trade this morning,” said Nick Kalivas, an equity analyst for MF Global.

The fact that China raised interest without leading to a drop in stock prices “was a sign of strength,” said Sandy Mehta, the chief investment manager for Value Investment Principals, based in Hong Kong.

After the bell, West Coast technology companies Netflix Inc. and eBay Inc. reported stronger than expected revenues. Shares of both companies were up more than 6 percent in after-market trading. The strong results could help shift sentiment in favor of technology companies, which took a beating Tuesday after earnings from Apple Inc. and IBM Corp. didn’t live up to investors’ high expectations.

Every segment within the Standard and Poor index rose, led by a 1.9 percent jump in S&P’s index of materials companies, a group that includes aluminum maker Alcoa Inc. and International Paper Co.

The dollar fell 1.2 percent against a broad basket of currencies as demand for safe-haven investments eased.

The Dow Jones industrial average rose 129.35, or 1.2 percent, to 11,107.97. The broader Standard and Poor’s 500 index was up 12.27, or 1.1 percent, to 1,178.17, and the technology-focused Nasdaq composite index was up 20.44, or 0.8 percent, to 2,457.39.

A batch of positive corporate earnings reports from companies like Delta Air Lines Inc., American Airlines parent company AMR Corp. and Boeing Co. helped send the stock market broadly higher.

Delta rose 10.8 percent after the company announced a profit driven by a 19 percent jump in passenger revenue. That helped push shares of competitors like Jet Blue and Southwest Airlines up more than 4 percent.

Boeing rose 2.3 percent after the aircraft manufacturer raised its profit forecast for the year and said that it expects to sell more commercial airplanes. Boeing was the top performer among the 30 companies in the Dow, followed closely by Caterpillar Inc. Bank of America, General Electric Co. and Hewlett Packard Co. were the only companies within the Dow index to fall.