The stock markets in the United States rallied following the strong rebound of Chinese equities today. The equity markets were down yesterday primarily due to concerns regarding the stock market rout in China.
The Dow Jones Industrial Average (DJIA) increased 0.19% to 17,548.62 points and the S&P 500 climbed 0.23% to 2,051.31 points. The NASDAQ rose 0.26% to 4,922.40 points while the Russell 2000 gained 0.42% to 1,234.15 points.
In an effort to stop the potential collapse of China’s stock markets, the country’s securities regulator banned major shareholders, corporate executives and directors from selling their stockholdings in listed companies.
As a result, the Shanghai Shenzhen CSI 300 Index rebounded 6.4% to 3,897.63 points. The index is still down from its peak at 5,380.43 points over the past 52 weeks.
Tang Yonggang, an analyst at Shenyin Wanguo Securities told the Wall Street Journal, “The market shows signs of stabilizing because the regulator came to rescue small-caps, especially those on the ChiNext, which eased the liquidity crisis and gave investors a much needed dose of confidence.”
China Securities Finance Corp., a unit of the China Securities Regulatory Commission increased its purchases of the stocks of small-cap companies.
Is the market rebound a selling opportunity?
Meanwhile, Terry Morris, a senior equity manager at National Penn Investors Trust Co told Bloomberg that he uncertain whether the market rally is for real. According to him, he will not be surprise of investors view the market rebound as a selling opportunity.
“Now that we’re entering into the thick of earnings season, investors might be more focused on that,” added Morris.
U.S. labor market situation
Today, the U.S. Department of Labor reported that the number of people who applied for unemployment benefits by 15,000 to 297,000 for the week ended July 4—the highest since February. The number showed that the improvement of the labor market paused.
U.S. stock market gainers and declines
Apple Inc. (NASDAQ: AAPL) declined 2% to $120.07 per share. The stock was probably impacted by the report that the tech giant was target by a private hacking group called Morpho. The group was involved in hacking Silicon Valley companies in 2013.
The stock price of Coty (NYSE: COTY) declined 5% to $30.04 per share. Coty entered into an agreement to merge with the 43 beauty brands of Procter & Gamble through a tax-free Reverse Morris Trust transaction. The company aims to create a global leader and new challenger in the beauty industry.
Walgreens Boots Alliance (NASDAQ: WBA) gained more than 4% to $89.85 per share. The company reported third quarter earnings that exceeded the consensus estimates of Wall Street Analysts. Walgreens Boots Alliance delivered earnings of $1.20 per share compared with the $0.87 per share expected by analysts.