Wall Street is set for a calmer trading day Tuesday after experiencing a massive sell-off to start the week, with global markets showing signs of recovery. Futures for the S&P 500 rose by 0.8%, and the Dow Jones Industrial Average futures gained 0.7%. The technology-heavy Nasdaq, which had tumbled over 3% at the beginning of the week, climbed 0.9%.
In Asia, Japan's benchmark Nikkei 225 index soared more than 10%, regaining nearly all the losses from Monday's historic plunge. "Calm finally appears to be returning," wrote Bas van Geffen of Rabobank. "The Nikkei's 10% gain didn't make up for Monday's loss, but at least it takes some of the 'panic' out of the selling."
The positive momentum was bolstered by strong corporate earnings reports in the US. Ride-hailing giant Uber surged 5.5% after reporting its highest revenue quarter ever, with sales reaching $10.7 billion. Caterpillar shares also jumped more than 4% after the heavy machinery manufacturer beat profit expectations, contributing to a broader sense of stability in the market.
However, not all companies shared in the optimism. SunPower Corp., a once-dominant player in the solar industry, announced it would seek bankruptcy protection. The San Jose-based company filed for Chapter 11 late Monday and plans to sell some assets to Solaria for about $45 million. Its shares plummeted over 40% before the opening bell.
European markets did not fully participate in the rebound, with Germany's DAX and London's FTSE 100 both down 0.2% by midday. The CAC 40 in Paris fell 0.5%. Despite these declines, the modest movements indicated a respite from the anxious selling seen in previous sessions.
Monday's market turmoil was reminiscent of the 1987 crash, driven by fears of a slowing US economy and rising interest rates in Japan. The Nikkei had lost a staggering 18.2% over two days, triggering a global sell-off. But by Tuesday, the Nikkei closed up 3,217.04 points at 34,675.46, as investors snapped up bargains following the previous day's rout.
The US dollar rose to 145.16 yen from 144.17 yen, reflecting the yen's rebound after the Bank of Japan's recent rate hike. Elsewhere in Asia, South Korea's Kospi surged 3.3% after an 8.8% decline on Monday. Hong Kong's Hang Seng index, however, gave up early gains to close 0.3% lower, while the Shanghai Composite index edged up 0.2%.
Monday's sell-off on Wall Street saw the S&P 500 drop 3%, marking its worst day in nearly two years. The Dow declined 2.6%, and the Nasdaq composite slid 3.4%. The downturn was exacerbated by weaker-than-expected US job data, intensifying fears that the Federal Reserve's prolonged high interest rates might have overstressed the economy.
Sentiment was somewhat buoyed by a report from the Institute for Supply Management, which indicated stronger-than-expected growth in US services, led by the arts, entertainment, and recreation sectors, as well as accommodations and food services. Despite the recent volatility, the US economy continues to grow, making a recession far from certain.
Oil prices remained stable, with US benchmark crude oil up 6 cents at $73 per barrel and Brent crude rising 3 cents to $76.33 per barrel. The euro fell to $1.0918 from $1.0954, reflecting broader currency market movements amid the ongoing economic uncertainties.
Japanese stocks, in particular, were hard-hit by the rapid appreciation of the yen, which undermines the export competitiveness of the country's manufacturers. The yen had surged to a seven-month high against the US dollar at around 143 but pulled back to 146 on Tuesday.
The Bank of Japan's recent monetary policy adjustments, including a rate hike and plans to taper bond buying, have added to market volatility. Traders expect more rate hikes as the central bank tries to contain inflation. "The big question now is will the BOJ follow through with another rate rise given all the criticism in the press. I believe they will and are not swayed by public or press opinion," said Neil Newman, head of strategy at Astris Advisory in Tokyo.
