US stocks bounce back
US stocks rose in early trading today, bouncing back after five days of heavy losses on the S&P 500 brought the benchmark index down more than 4 per cent.
The S&P closed yesterday below its 50-day moving average for the first time since December, and the level provided technical resistance in today’s rebound.
The 50-day moving average on the S&P 500 index is now just above 1,373, coinciding with today's session high.
Sectors associated with economic growth led the way as they became attractive to bargain hunters. The S&P financial sector index rose 1.5 per cent with Bank of America up 3 per cent at $8.80.
Today marked the largest daily percentage decline on the S&P in four months, and investors will evaluate if the slide presents an opportunity for those who missed the market gains in the first three months of the year.
"I see it as normal for the market to take a break after its best first quarter since 1998. If that's the only blip we see, it was pretty shallow," said Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston.
The Dow Jones industrial average rose 103.96 points, or 0.82 per cent, to 12,819.89. The S&P 500 Index gained 13.54 points, or 1.00 per cent, to 1,372.13. The Nasdaq Composite added 30.65 points, or 1.02 per cent, to 3,021.87.
Alcoa shares rose 7 per cent to $9.96 a day after the Dow component posted a first-quarter profit instead of a loss Wall Street was expecting.
Glass container maker Owens Illinois, the largest gainer on the S&P 500 a day after the company said it expects a 35 per cent rise in its first-quarter profit, sending its shares up more than 8 per cent to $23.81.
US-traded shares of Nokia tumbled 14 per cent after the mobile phone maker warned its phone business would post losses in the first two quarters this year, as it struggles to revamp its product line.
Bearish analysts, however, see more declines ahead as a result of an overextended market that has lost its footing as the euro zone debt crisis resurfaces and US economic indicators soften.
Still, the economy would have to take a "fairly dramatic" turn for the Federal Reserve to launch another round of monetary stimulus, Atlanta Fed president Dennis Lockhart said.
Signals that the Fed was not keen to push for more stimulus triggered the market pullback that started last week.
Investors have an eye on developments in Indonesia after a massive earthquake and aftershocks struck off its coast, bringing back memories of a 2004 tsunami that killed about 230,000 people in 13 Indian Ocean countries, including Thailand, Sri Lanka and India.
The low-volume Market Vector Indonesia index ETF edged up 0.6 per cent.