Stocks open higher as Street attempts recovery
U.S. stocks traded mildly higher Tuesday, attempting recovery from a sharply lower start to the year, as investors eyed oil prices and auto sales.
“Yesterday the S&P managed to close above 2,000. (It) was a good sign we’re probably getting to the end of this decline,” said Peter Cardillo, chief market economist at First Standard Financial.
Tuesday should be a “mixed to higher session based on strong car sales,” he said. “And oil prices seem to be rebounding this morning. Yesterday may have been a quirk, not an indication of what may or may not happen later this year.”
Crude oil briefly attempted gains in early morning trade before trading more than 1 percent lower near $36.30 a barrel as of 9:25 a.m., ET. Brent held about 1.5 percent lower near $36.70 a barrel.
Auto sales are due throughout the day. The key economic report for the week, after Monday’s sub-50 manufacturing ISM print, is the jobs report expected Friday.
Dow futures came off session lows of more than 100 points lower to trade about 20 points lower ahead of the market open. Traders noted support from gains in European stocks. The German DAX and STOXX Europe 600 recovered from session lows to trade about half a percent higher.
Overnight trading in the Shanghai composite was volatile before the index closed down about 0.3 percent, while the blue-chip CSI300 closed nearly 0.3 percent higher. The Hang Seng fell more than half a percent, while the Nikkei 225 was off about 0.4 percent.
The People’s Bank of China (PBOC) injected nearly $20 billion into money markets, its largest cash injection since September, Reuters reported, noting traders suspected the PBOC was using state banks to prop up the yuan at the same time.
Reuters also said the China Securities Regulatory Commission (CSRC) announced plans for new rules to further restrict share sales by major stakeholders in listed companies, and said it would further tweak the circuit breaker mechanism amid criticism that it had fueled Monday’s sell-off.
The Chinese yuan strengthened slightly after hitting multi-year lows Monday.
The U.S. dollar traded about half a percent higher against major world currencies, with the euro near $1.075 and the yen near 119.08 yen against the greenback.
Treasury yields traded mixed, with the 2-year yield (US2Y) at 1.03 percent and the 10-year yield (US10Y) near 2.25 percent as of 9:36 a.m., ET.
Global benchmark indexes fell sharply Monday after the Shanghai composite plunged nearly 7 percent before triggering a circuit breaker and halting trade for the day.
The Dow Jones industrial average closed down 1.58 percent Monday for its worst percentage performance on the first trading day of a year since 2008. The S&P 500 and Nasdaq composite closed down 1.53 and 2.08 percent, respectively, for their worst start to a year since 2001.
“Yesterday’s decline marked a loss of short-term momentum that is a setback for the market, although support levels remain intact for the major indices,” BTIG Chief Technical Strategist, Katie Stockton, said in a note. “The SPX has initial support near 1,995 (the equivalent of 1978 for the S&P futures), with secondary and more important support near 1,965. Initial resistance remains just above 2,100, defining the upper boundary of a two-month trading range.”
In the open, the Dow Jones industrial average (.DJI)gained 47 points, or 0.26 percent, to 17,192, with Wal-Mart (WMT) leading advancers and Walt Disney (DIS) the greatest laggard.
The S&P 500 (.SPX) traded up 8 points, or 0.41 percent, to 2,020, with health care leading nine sectors higher and utilities the only decliner.
The Nasdaq (.IXIC) composite gained 21 points, or 0.42 percent, to 4,923.
About two stocks advanced for every decliner on the New York Stock Exchange, with an exchange volume of 41 million and a composite volume of 84 million in the open.
Crude oil futures for February delivery fell 29 cents to $36.47 a barrel on the New York Mercantile Exchange. Gold futures for February delivery gained $1.60 to $1,076.80 an ounce.
—Reuters contributed to this report.
On tap this week:
December light vehicle sales announced
Earnings: Monsanto, RPM International
7 a.m.: Mortgage applications
8:15 a.m.: ADP employment report
8:30 a.m.: International trade
9:45 a.m.: PMI services index
10 a.m.: Factory orders and ISM non-manufacturing index
10:30 a.m.: Oil inventories
2 p.m.: FOMC minutes
Earnings: Walgreens Boots Alliance, Constellation Brands, Finish Line, KB Home, Bed Bath & Beyond, PriceSmart, Ruby Tuesday, Synnex, The Container Store, WD-40
7:30 a.m.: Challenger job-cut report
8:45 a.m.: Richmond Fed President Jeffrey Lacker speaks on the economic outlook for January 2016 at the Greater Raleigh Chamber of Commerce in Raleigh, North Carolina.
8:30 a.m.: Jobless claims
10:30 a.m.: Natural gas inventories
2:15 p.m.: Chicago Fed President Charles Evans speaks on economic conditions and monetary policy at the Wisconsin Economic Forecast Luncheon in Madison, Wisconsin.
4:30 p.m.: Fed balance sheet/money supply
Earnings: Acuity Brands
8:30 a.m.: Non-farm payroll, unemployment rate and average hourly wages
10 a.m.: Wholesale trade
11:30 a.m.: San Francisco Fed President John Williams speaks
1 p.m.: Rig count
1 p.m.: Richmond Fed President Jeffrey Lacker speaks
3 p.m.: Consumer credit and Treasury STRIPS
*Planner subject to change.