The Dow Jones industrial average rose 67.78 points, or 0.4 percent, to 17,545.18.
The index plunged 6.2 percent to 3,748.16 for its largest fall since an 8.5 percent dive on July 27, which was itself the biggest slide in eight years. Morgan Stanley said the company’s upbeat outlook on some of its businesses “does not change our tactically negative view on the segment and the stock”.
NEW HOUSES: Builders started work on single-family homes at the fastest pace since 2007, driving up shares in Lennar, D.R. Horton and other companies tied to the housing market.
The Shanghai share index plunged more than 6 percent Tuesday, its biggest drop in three weeks, as investors resumed sell-offs of Chinese stocks despite the stabilization of the Chinese yuan after a sharp devaluation last week.
The report said housing starts inched up by 0.2 percent to an annual rate of 1.206 million in July from the revised June estimate of 1.204 million.
China’s central bank on Tuesday set the yuan’s midpoint near Monday’s closing price at 6.3966 per U.S dollar.
“All the news out of China recently has done nothing to restore confidence in its financial markets”, said David Madden, market analyst at IG, “and the ripple effect can be felt in Europe“. Construction of single-family houses accounted for all of the gains.
Concerns about slowing growth in China also hit commodities, as benchmark copper prices slid to a six-year low of $4,989, below the psychological $5,000 a tonne level, and was last down 2.3% at $4,999 a tonne.
Other Asian stock markets also turned lower in afternoon trade.
Trading in currency markets was similarly tepid with the euro 0.1 percent lower at $1.1061 and the dollar 0.2 percent down at 124.25 yen.
The major European markets also moved to the downside on the day. Worries over China, a key customer for German-made machinery, chemicals and other goods, have helped knock the DAX down 3.5 percent so far this month. Japan’s Nikkei 225 dipped 0.3 percent. Hong Kong’s Hang Seng index sank 1.4 percent to 23,474.97 while Australia’s S&P/ASX 200 fell 1.2 percent to 5,303.10.
Crude oil prices recovered though from initial declines after bullish U.S. housing data and on bets on an inventory decline. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.7 basis points at 2.187 percent. U.S. crude rose 75 cents to close at $42.62 in New York. Gains were modest, but broad as nine of the 10 industry groups of the Standard & Poor’s 500 index ended the day higher, led by health care stocks.
