U.S. stocks returned to the upper end of their recent trading range on Monday thanks to a curious last-minute surge in China’s markets overnight that had all the trademarks of an official intervention. That’s not surprising given Beijing’s recent proclamations that its stock market turmoil was over.
In the end, the Dow Jones Industrial Average gained 2.4%, the S&P 500 gained 2.5%, the Nasdaq Composite gained 2.7%, and the Russell 2000 gained 2.3%. The day’s action marked the 12th triple-digit change for the Dow in the last 14 sessions. Volatility, for now, still reigns.
The Shanghai Composite finished with a 2.9% gain — remaining range bound between 3,000 and 3,200. That helped lift global sentiment after weak trade data lifted hopes of fresh stimulus from the People’s Bank of China. Exports tumbled 6.1% in August while imports fell 14.3% for the 10th consecutive decline and the worst print since May.
Here at home, Federal Reserve officials continue to keep the market in a “will they or won’t they” tension ahead of their Sept. 17 policy decision about whether to raise interest rates for the first time in nearly 10 years. Dovish comments from San Francisco Fed President John Williams helped lift sentiment as well, saying that while penciling in two rate hikes this year back in June he is now uncertain any hikes at all will happen.
Healthcare stocks led the way with a 2.9% gain while energy were the laggards, rising just 1.5%.
Teco Energy, Inc. (NYSE:TE) surged 25% after agreeing to be acquired by Emera for $27.55 a share in a deal worth more than $10 billion. Fitbit Inc (NYSE:FIT) gained 11.2% after an analyst upgrade by Morgan Stanley citing the strong brand and market share the fitness wearable maker enjoys even after the much-hyped (and frankly, disappointing) launch of Apple Inc.’s (NASDAQ:AAPL) Apple Watch.
After the close, Yahoo! Inc. (NASDAQ:YHOO) plunged more than 3% after the IRS declined to issue a ruling on the tax liability of its Alibaba Group Holding Ltd (NYSE:BABA) spinoff, Abaco Holdings. This comes after BABA shares dropped 4.7% in the cash session on cautious comments from executives at a Citigroup conference, blaming macroeconomic issues in China.
Looking ahead, Wednesday will feature an update on the government’s Job Openings and Labor Turnover survey — another critical indicator of labor market health for the Fed to consider. For its part, the Treasury bond market seems to be pricing in a “no hike” decision and the increase in inflation expectations that will accompany it as the ProShares UltraShort 20+ Year Treasury Bond (NYSEARCA:TBT) recommended to Edge subscribers gained 2.9% today.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
