US open: Dow surges 300 points on fresh China stimulus

US stocks soared early on Wednesday, as Wall Street was buoyed by China’s decision to introduce new stimulus measures.

Just before 1500 BST, the Dow Jones Industrial Average was up 321 points to 15,987.73, while the S&P 500 and the Nasdaq were up 36 and 124 points respectively.

Chinese stimulus

After the close of trading in Chinese markets, the People’s Bank of China said on Wednesday that it had introduced $140bn yuan (£14bn) into the country’s economy in a bid to halt the slowdown that has hampered the world’s second biggest economy.

The move followed the central bank’s decision to cut interest rate on Tuesday, which sparked a brief revival in US equities, before they surrendered gains late on in the session to close in the red.

“The bulls currently are displaying a complete absence of conviction,” said Alastair McCaig, market analyst at IG.

“However it’s worth remembering that we’re still at the tail end of the summer and equity market volumes still remain particularly thin adding to the market’s ability to exaggerate moves.”

Asian stocks were mixed, with the Shanghai Composite declining 1.28% and Hong Kong’s Hang Seng falling 0.84%, while the Nikkei was up 3.20%.

European stocks were in the red, as worries about a slowdown in China continued to unsettle investors, while oil prices were mixed, as West Texas Intermediate shed 0.25% to $39.21 a barrel, while Brent rose 0.35% to $43.36 a barrel.

The dollar surged 1.08% against the euro and gained 0.49% and 0.81% against the dollar and the pound respectively, while gold futures shed 1.25% to $1,124.10.

Wednesday data

According to the Commerce Department, orders for durable goods rose 2% in July compared with the 0.6% reading analysts had forecast.

Excluding transportation, however, orders rose 0.6%, while orders for core capital goods rose 2.2% to reach their highest level in 13 months.

Meanwhile, the Mortgage Bankers Association said its seasonally adjusted index of application activity, which covers home purchase demand and refinancing demand, climbed 0.2% in the week ended 21 August.

The seasonally adjusted sub-index of refinancing applications fell 1%, while the index of loan requests for home purchases, a key indicator of home sales, rose 1.7%.

In company news, Schlumberger declined 2.07% ahead of the bell after the oilfield services giant announced it would pay a 37% premium to acquire its rival Cameron International.

Offshore contract drilling services Transocean slid 2.54% in pre-market trading after revealing late on Tuesday it was seeking to cancel upcoming dividend payments.

Going the other way, Google jumped 5.59% after analysts at Goldman Sachs upgraded their rating on the stock from 'neutral' to 'buy'.

The earnings season continues, with apparel retailer Guess, cloud applications provider Workday and e-commerce group Williams-Sonoma all on tap after the close.