U.S. Stocks Rise as China Cuts Rates to Boost Growth

Story by Bloomberg
Written by Rita Nazareth

U.S. stocks rose, following the biggest gain in the Standard & Poor’s 500 Index this year, as China cut interest rates for the first time since 2008 to bolster growth in the world’s second-largest economy.

The S&P 500 rose 0.8 percent to 1,326.23 at 9:31 a.m. New York time. The benchmark index jumped 2.3 percent yesterday.

“Speculation about what policy makers may do as a follow up to what China has done is bolstering markets,” said Mike Ryan, the New York-based chief investment strategist at UBS Wealth Management Americas.

“There’s a perception that if growth decelerates, if markets become stressed, that global policy makers stand ready with additional measures. In addition, the risk-off trade had been pretty severe. The market has moved into what we consider to be very inexpensive ranges.”

Equities rallied as China’s move fanned optimism that global policy makers will act to bolster growth. Federal Reserve Chairman Ben S. Bernanke is scheduled to testify on the outlook for the economy in Congress today.

Fed Vice Chairman Janet Yellen yesterday said slowing job growth and deteriorating financial-market conditions show the U.S. economy “remains vulnerable to setbacks” and may warrant additional stimulus.