Stocks trim opening gains, up about 2% in choppy trade
U.S. stocks jumped on Wednesday, attempting for a second day to bounce from a recent plunge, as investors eyed stimulus moves out of China and U.S. data.
Stocks pared gains after a sharp rally in the open. The Dow Jones industrial average was up about 200 points after briefly gaining as much as 433.67 points, while the Nasdaq briefly gained 3 percent and the S&P 500 initially topped 2.5 percent in gains.
The major averages remain in correction territory.
"It looks just like yesterday at this time where things are weaker (in) general overseas, but people look optimistic at the open," said Randy Frederick, managing director of trading and derivatives at Charles Schwab.
"Overseas, the Chinese markets are still down. I don't think that's a huge deal but people seem to think it does," he said.
The Shanghai Composite closed down 1.3 percent after fluctuating throughout the day. The Hang Seng also closed lower, while the Nikkei jumped 3.2 percent.
European stocks traded lower but well off sharp initial lows.
"Today is the first day in which global equity markets are mixed, not collectively up big or down big," Katie Stockton, chief technical strategist at BTIG, said in a morning note.
"This could be an early indication of the correction releasing its hold, but we have yet to see a reaction to widespread oversold conditions," she said. "The extremes in our market internal measures support a relief rally in the days ahead, and we think the magnitude of that rally may hold information about whether the breakdowns that have occurred are real or shakeouts."
Futures extended gains, with the Dow futures indicating a higher open, briefly rising more than 350 points and implying a plus-450 point open.
The New York Stock Exchange invoked Rule 48 for a third straight session, after implementing the rule on Monday and Tuesday for the first time since the financial crisis, Dow Jones reported. The goal of the rule is to ease market volatility.
Overnight, China's central bank said it had injected 140 billion yuan ($21.8 billion) into the interbank money market via short-term liquidity operations (SLOs).
The Peoples' Bank of China fired a double-barreled easing shot on Tuesday-lowering interest rates and the reserve requirement ratio (RRR) by 25 basis points and 50 basis points respectively-but this was not enough to reassure markets of slowing growth fears.
"Investors are still pretty cautious about this rally," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
He viewed the Dow futures' implied 400-point open as "acting suspiciously." "This is an opportunity to lighten up on positions you didn't get to yesterday," he said.
Read More Traders spooked after head fake rally, eyeing Fed
Stocks bounced nearly 3 percent or more in early trade Tuesday but failed to hold gains, with the Dow and S&P closing more than 1 percent lower and the Nasdaq also in the red.
In the last week-and-a-half, the S&P 500 (INDEX: .SPX) has lost nearly $2 trillion in market capitalization, with $900 billion lost in this week's two trading sessions alone.
On the data front in the U.S., durable good orders for July rose 2.2 percent, above the expected 0.1 percent rise, but down from the 3.4 percent gain last month.
New York Federal Reserve President William Dudley said the region is doing well, and said NYC job strength is linked to tech. He made no comments on monetary policy in the prepared statement. A question-and-answer session is expected following the prepared remarks.
The U.S. dollar edged higher against major world currencies, with the euro just below $1.14 and the yen slightly weaker near 119 yen against the greenback.
Treasury yields spiked after the durable goods report and held just below highs, with the 10-year yield near 2.15 percent and the 2-year yield at 0.66 percent.
The Dow Jones Industrial Average (Dow Jones Global Indexes: .DJI) traded up 343 points, or 2.19 percent, at 16,011, with Merck leading all blue chips higher.
The S&P 500 (INDEX: .SPX) traded up 41 points, or 2.22 percent, at 1,908, with information technology leading all 10 sectors higher.
The Nasdaq (NASDAQ: .IXIC) traded up 102 points, or 2.27 percent, at 4,609.
The CBOE Volatility Index (VIX) (INDEX: .VIX), widely considered the best gauge of fear in the market, traded near 31.
Schwab's Frederick said he was watching to see if, in a positive sign for markets, the VIX could fall below 30 and trade closer to 20. The index spiked above 50 on Monday for the first time since February 2009.
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About seven stocks advanced for every decliner on the New York Stock Exchange, with an exchange volume of 83 million and a composite volume of 243 million in the open.
Crude oil futures fell 8 cents to $39.23 a barrel on the New York Mercantile Exchange. Gold futures fell $14.90 to $1,123.20 an ounce in morning trade.
Correction: This story originally said the Markit services PMI was due Wednesday when it was released on Tuesday.
On tap this week:
Wednesday
10 a.m.: New York Fed President Dudley on regional economy, Q&A
1 p.m.: $35 billion 5-year note auction
Thursday
Jackson Hole Fed symposium begins
8:30 a.m.: Initial claims
8:30 a.m.: Real GDP Q2 (second)
10 a.m.: Pending home sales
1 p.m.: $29 billion 7-year note auction
Friday
8:30 a.m.: Personal income
10 a.m.: Consumer sentiment
Saturday
12:25 p.m.: Fed Vice Chairman Stanley Fischer at Jackson Hole; topic U.S. inflation
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