US stocks end sharply higher for 2nd day

Associated Press

Investors were in a buying mood again Thursday, driving U.S. stocks higher for the second-straight day as they took advantage of this month’s heavy sell-off.

The rally came a day after the stock market delivered its biggest gain in almost four years, ending a steep six-day slump that was triggered by concerns about the health of the Chinese economy.

Energy stocks surged as the price of U.S. oil jumped more than 10 percent, closing back above $40 a barrel.

Investors were encouraged by a rebound in the Chinese stock market as the nation’s main index logged its biggest gain in eight weeks. They also welcomed a report indicating that the U.S. economy expanded in the second quarter at a much faster pace than previously estimated.

But mostly it was the opportunity to pick up beaten down shares that drove the rebound. By Tuesday’s close, the Standard & Poor’s 500 index had tumbled more than 10 percent from the all-time high that it set in May.

“Asset prices sold off so much and so drastically, people went in and did start to bottom-fish,” said David Lyon, global investment specialist at J.P. Morgan Private Bank in San Francisco.

The Dow Jones industrial average climbed 369.26 points, or 2.3 percent, to 16,654.77. The index has recouped almost 1,000 points in the last two days. That’s more than half of its losses during a sharp six-day slump.

The S&P 500 index gained 47.15 points, or 2.4 percent, to 1,987.66. The Nasdaq composite rose 115.17 points, or 2.5 percent, to 4,812.71.

Thursday’s market action pushed the three indexes into positive territory for the week and nudged the Nasdaq out of the red for the year. The tech-heavy index is now up 1.6 percent for the year, while the Dow and the S&P 500 are still lower.

Financial markets have been volatile since China decided to weaken its currency earlier this month, a move investors interpreted as an attempt to bolster a sagging economy.

But Thursday, the news out of China was more positive. The Shanghai Composite Index rose 5.3 percent, its first gain in six days. The index is rebounding from losses that triggered worldwide selling and wiped nearly 23 percent off its value over the past week.

Traders also are jittery about the outlook for interest rates.

The Federal Reserve has signaled it could raise its key interest rate for the first time in nearly a decade later this year.