The S&P 500 gained 46.94 points (2.48 percent), to 1,940.15.
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Wednesday was the second day that stocks staged a morning rally.
A rebound that took the Dow up more than 440 points on Tuesday disappeared in the final hour of trading, with investors giving in to trepidation over what would happen overnight in China. Traders are pricing in a roughly one-in-four chance the central bank will act at its September meeting, down from nearly even odds before China’s surprise currency devaluation earlier this month.
Wall Street cheered the move, which was described in a PBOC statement as “promoting restructuring” to “stabilize the real economy“.
Economists said Tuesday’s Chinese response – a 25-basis-point cut in key rates and 50 bps off the reserve requirement rate for large commercial banks – sent a clear signal that Beijing, which has stepped in several times this year to keep China’s growth on track, was still willing to intervene.
In corporate news, Pepco Holdings Inc (POM.N) fell 16.47% after a District of Columbia regulator denied Exelon Corp’s $6.8 billion bid for the power utility, possibly delivering a knockout blow to the deal.
Dow Jones and S&P 500 index futures were both up 3.7 percent, an indication the U.S. market was set to open higher.
Cameron global, a maker of equipment for the oil industry, jumped 45 percent after Schlumberger said it was buying the company in a cash-and-stock deal.
U.S. banks rose along with expectations of a rate hike this year, with Bank of America up 3.5 percent at $15.82. Its stock price tumbled more than 10 percent.
Earnings reports from Abercrombie & Fitch, Express and Frontline are expected ahead of the opening bell. Britain’s FTSE 100 was 3.4 percent higher.
“The struggle between gains and losses suggests that the market doesn’t really know what to make of the policy move yet”, Bernard Aw, a strategist at IG Asia in Singapore, told Bloomberg News.
Japan’s Nikkei Stock Average was up 0.5 per cent and South Korea’s Kospi rose 0.2 per cent.
China’s benchmark Shanghai Composite Index – the source of much angst during recent volatility – fell by 3.6% in early trading but bounced back to gain 0.8% to 2,988.76 by the midday break.
Benchmark U.S. crude gained 59 cents to $38.83 per barrel in electronic trading on the New York Mercantile Exchange.
The worldwide market decline has extended to commodities, including crude oil, which is below $40 per barrel for the first time since the financial crisis six years ago.
Data on Tuesday showed U.S. consumer confidence increased to a seven-month high in August. The yield on the 10-year Treasury note rose to 2.13 percent from 2.07 percent late Tuesday.
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In currency trading, the dollar rose to 118.96 yen versus 118.66 yen late Wednesday.
