Stocks rally as Wall St. set to end 5-day slide

July 29 01:40 2015

Stocks rallied Tuesday as Wall Street was set to shake off its 5-day losing streak, its worst stretch since early January. Markets around the world stabilized after China’s battered and volatile stock market fell again but rebounded from steep session lows and U.S. traders readied for the Federal Reserve’s statement on interest rates when the central bank’s two-day meeting ends Wednesday.AP WALL STREET F USA NY

The Dow Jones industrial average was up almost 200 points, or 1.1%, in late afternoon trading. The Standard & Poor’s 500 index gained 1.3% and the Nasdaq composite index rose1%. The wild ride on the Shanghai composite index in China continued Tuesday, but the index, which suffered its worst one-day drop in eight years on Monday when it plunged 8.5%, finished Tuesday’s trading session off 1.7%, after being down more than 5% earlier in the session.

The bounce back in China, which was helped by more steps taken by Chinese regulators and central bankers to stem the panic, was welcomed by investors around the world, which fear a further meltdown in mainland Chinese shares would exacerbate an economic slowdown in the world’s second-biggest economy and dent global growth as well.

The Shanghai’s bounce from session lows today, which came in another wild day of trading, sparked a rally in shares in other global stock markets. Shares in Hong Kong rose 0.6% and Japan’s Nikkei 225 index erased nearly all of its intraday losses to finish down just 0.1%. The rally spread to Europe. The FTSE 100 in London was up 0.8%, Germany’s DAX is 1.1% higher. And CAC 40 in Paris was 1% higher.

Wall Street is also bracing for the Fed policy announcement on interest rates Wednesday when the central bank breaks from its two-day July meeting. The big question is when the Fed will start to hike short-term interest rates for the first time in nearly a decade. Earlier this month in her semi-annual testimony to Congress, Fed chair Janet Yellen reiterated that the conditions in the labor market and U.S. economy are improving, making it appropriate for the Fed to begin its rate-hike cycle later this year.