US stocks surged upwards today, bringing an end to six consecutive days of declines.
At close, the S&P 500 was up 3.9 per cent, while the Dow Jones Industrial Average and Nasdaq ended the day 3.96 per cent higher and 4.24 per cent higher, respectively.
In the case of the S&P 500 and Dow, these were the biggest gains made since 2011, and made up for the losses suffered earlier in the week amid the panic over China's economy.
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The Shanghai Composite Index fell 8.5 per cent on Monday, precipitating a mass sell-off across US and European markets. Europe recovered slightly on Tuesday, while US stocks continued to fall.
But this morning, the US rise started from the moment trading began. It really took hold in the afternoon, however, when Fed policymaker William Dudley cast doubt on an imminent interest rate rise.
In a speech, he said a September hike was no longer “compelling” due to the effects a China slowdown could have on the US. Rates have been kept at their current near-zero levels since 2006.
From my perspective, at this moment, the decision to begin the normalization process at the September FOMC meeting seems less compelling to me than it was a few weeks ago.The slowdown in China could lead… to a slower global growth rate and less demand for the US economy.