U.S. Stocks Rebound From Sell-Off As Fed Rate Cut Odds Improve


Technology and health care companies helped U.S. stocks rebound broadly from an early sell-off Thursday, snapping the market’s steep two-day skid.

The Dow Jones Industrial Average swung from a loss of more than 330 points to a gain of more than 120 after another disappointing economic report raised expectations among investors that the Federal Reserve will cut interest rates again to help keep the U.S. economy growing. The S&P 500 and Nasdaq also recovered from the early rout.

Traders were jolted by surprisingly slow growth in the U.S. services sector last month, the weakest in three years. That followed troubling news on business hiring and manufacturing earlier this week that knocked the market lower.

The S&P 500 index rose 23.02 points, or 0.8%, to 2,910.63. The Dow gained 122.42 points, or 0.5%, to 26,201.04. The Nasdaq, which is heavily weighted with technology stocks, climbed 87.02 points, or 1.1%, to 7,872.26. The Russell 2000 index of small-company stocks gained 6.72 points, or 0.5%, to 1,486.35.

While stock prices recovered from their early stumble, investors continued to shift money into the relative safety of U.S. bonds. That drove bond prices higher, lowering their yields. The yield on the 10-year Treasury fell to 1.54% from 1.59% late Wednesday.

Stocks are off to a turbulent start in October. The benchmark S&P 500 is down 2.2% for the month so far, wiping out all the index’s gain from September.

Investors are wrestling with uncertainty about the economy, mostly due to the costly and long-running trade war between Washington and Beijing. The market slumped early Thursday after investors weighed the latest signal of U.S. economic weakness.

The Institute for Supply Management, an association of purchasing managers, said that its non-manufacturing index sank to 52.6 from 56.4 in August. Readings above 50 signal growth, but September’s figures are the lowest since August 2016.

On Tuesday, a private index of U.S. manufacturing output dropped to its lowest level since the recession year 2009.

The discouraging economic data this week has shifted investors’ expectations of further interest rate cuts by the Federal Reserve.

Given the recent spate of downbeat economic data, all eyes will be on the federal government’s September job market snapshot, which is due out Friday. The Labor Department is expected to report that U.S. employers added 145,000 jobs last month, up from 130,00 in August, according to analysts polled by FactSet.

Solid gains by Microsoft, which climbed 1.2%, helped drive the technology sector higher Thursday. Chipmakers were among the sector’s biggest gainers. Nvidia rose 4.8% and Micron Technology added 3.5%.

Health care, communication services and industrial stocks also helped power the market rebound. Pfizer rose 2.2%, Facebook gained 2.7% and Boeing rose 1.3%.

Benchmark crude oil fell 19 cents to settle at $52.45 a barrel. Brent crude oil, the international standard, added 2 cents to close at $57.71 a barrel. Wholesale gasoline rose 1 cent to $1.56 per gallon. Heating oil climbed 1 cent to $1.88 per gallon. Natural gas rose 8 cents to $2.33 per 1,000 cubic feet.

Gold rose $6.10 to $1,507.10 per ounce, silver was unchanged at $17.59 per ounce and copper fell 1 cent to $2.55 per pound.

The dollar fell to 106.87 Japanese yen from 107.22 yen on Wednesday.