Dow, S&P rise after five-day selloff; Fed meeting eyed

The S&P 500 and the Dow Jones industrial average rose on Tuesday, breaking a five-day losing streak, as investors refocused on corporate earnings ahead of a two-day U.S. Federal Reserve meeting which could give clues regarding the timing of a rate hike.

The Nasdaq composite opened higher but turned negative shortly, dragged down by Baidu's 14.6 percent slump after China's biggest Internet search company's quarterly profit missed estimates.

Wall Street sank on Monday after the steepest decline in Chinese stocks in eight years increased concerns about slowing growth in the country.

After Chinese stocks plunged more than 8 percent, the country's top securities regulator said Beijing would keep buying shares to stabilize the market.

"The Chinese markets rallied a little bit today and European equities are up which is also spilling over to the U.S. market after a five-day selloff which was slightly overbought," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

The U.S. Federal Reserve begins its two-day policy meeting on Tuesday. No move on rates is expected this week, but close attention will be paid to whether Fed chair Janet Yellen signals September or December as the most likely date for a "liftoff".

"I don't expect any changes at the end of the Fed meeting and September still looks to be on the table for a rate increase," Luschini said.

At 9:52 a.m. ET, the Dow Jones industrial average was up 35.88 points, or 0.21 percent, at 17,476.47, the S&P 500 was up 5.09 points, or 0.25 percent, at 2,072.73 and the Nasdaq Composite was down 6.65 points, or 0.13 percent, at 5,033.13.

Nine of the 10 major S&P 500 sectors were higher with the industrials index's 0.81 percent rise leading the advancers. The materials index was the only laggard, dragged down by DuPont's 4.9 percent fall after the chemicals company cut its profit forecast for the year.

With second-quarter reports well under way, analysts expect overall earnings of S&P 500 companies to rise 0.3 percent, below the 3-percent decline expected at the start of July, according to Thomson Reuters data.

Such results could inflate already relatively pricey valuations. The S&P 500 is trading near 16.9 times forward 12-month earnings, above the 10-year median of 14.7 times, according to StarMine data.

Some of the big names scheduled to report on Tuesday include Twitter , Gilead and Yelp after the close.

Data expected during the day includes the index of U.S. consumer attitudes at 10 a.m. ET (1400 GMT). The index is expected to have fallen to 100.0 in July from 101.4 in June.

United Parcel Service rose 3.9 percent to $98.85 after the company's quarterly profit rose.

Ford rose 2 percent to $14.85 after the automaker's second-quarter earnings beat Wall Street expectations, based on the continued strength of its North American sales.

Advancing issues outnumbered decliners on the NYSE by 1,566 to 1,119. On the Nasdaq, 1,227 issues fell and 1,035 advanced.

The S&P 500 index showed seven new 52-week highs and seven new lows, while the Nasdaq recorded 10 new highs and 58 new lows.

 

(Editing by Don Sebastian)