NEW YORK – U.S. stocks rallied more than 2 percent in the late afternoon on Tuesday, bouncing after losses last week and as hopes increased for more stimulus measures from the Chinese government.
The gains followed a late rally in Chinese shares and losses of at least 3 percent last week in each of the major U.S. stock indexes.
Gains were broad-based, with all of the 10 major S&P sectors higher.
China said late on Monday it would remove a tax on dividend incomes for investors who hold stocks for more than a year in an effort to encourage longer-term investment.
Data on Tuesday showed that China’s imports shrank far more than expected in August, falling for the 10th straight month, bolstering hopes of more stimulus measures from the Chinese government.
“We had some nice buying opportunities with the sell-off in August, and I think people are starting to take advantage of that and put money to work,” said Larry Peruzzi, senior equity trader at Cabrera Capital Markets Inc. in Boston.
“In China it seems like there is a willingness to continue with stimulus, so hopefully those markets will stabilize.”
At 3:20 p.m., the Dow Jones industrial average was up 350.18 points, or 2.17 percent, at 16,452.56. The Standard & Poor’s 500 Index was up 42.36 points, or 2.20 percent, at 1,963.58. The Nasdaq Composite Index was up 111.99 points, or 2.39 percent, at 4,795.90.
Global financial markets have been rattled in recent weeks by fears that China’s slowdown could drag on already sluggish global growth, prompting some investors to bet that the U.S. central bank will delay a hike until the end of the year.
Wall Street capped a tough week on Friday, with a mixed August jobs report doing little to quell uncertainty about whether the Federal Reserve will increase interest rates at its Sept. 16-17 meeting.
Apple shares were up 1.6 percent at $111.02, a day before the iPhone maker is expected to unveil new offerings. The stock gave the biggest boost to the S&P and the Nasdaq.
Fitbit was up 10.7 percent at $35.28 after Morgan Stanley upgraded the stock to “overweight.”
Media General fell 1.7 percent to $10.96 after it said it would buy diversified media company Meredith Corp. for about $2.34 billion to create the third-largest local TV station owner in the United States. Meredith was up 9.3 percent at $50.21.
Advancing issues outnumbered declining ones on the NYSE by 2,423 to 619, for a 3.91-to-1 ratio on the upside; on the Nasdaq, 2,177 issues rose and 637 fell for a 3.42-to-1 ratio favoring advancers.
The benchmark S&P 500 index posted 1 new 52-week high and no new lows; the Nasdaq Composite recorded 42 new highs and 23 new lows.
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Traders work on the floor of the New York Stock Exchange Tuesday. | REUTERS
