U.S. stocks rebounded Tuesday, a day after China's stock market suffered its greatest single-day loss since 2007. Investors are turning their attention to the U.S. Federal Reserve’s policy meeting Tuesday and Wednesday. The Federal Open Market Committee will issue a statement from the central bank Wednesday afternoon.
Seven of the 10 S&P 500 sectors traded higher, led by a 1 percent gain from the energy sector, while telecommunication was the biggest laggard, down just 0.1 percent.
The Dow Jones Industrial Average (INDEXDJX:.DJI) gained 81.74 points, or 0.47 percent, to 17,522.33. The Standard & Poor's 500 index (INDEXSP:.INX) added 10.15 points, or 0.49 percent, to 2,077.91. And the Nasdaq composite (INDEXNASDAQ:.IXIC) rose 6.67 points, or 0.13 percent, to 5,045.97.
Dow component Chevron Corporation (NYSE:CVX) was the biggest gainer in the index Tuesday, up 2 percent, while Boeing Co. (NYSE:BA) was the largest decliner, down 1 percent.
China's stock market remained jittery Tuesday, paring losses and closing down nearly 2 percent after its benchmark index plunged 8.5 percent on Monday, suffering its biggest one-day loss in eight years.
Market professionals are awaiting a statement from U.S. Federal Reserve Wednesday that will reveal the overall health of the economy. The Fed has signaled recently that it could begin returning interest rates to normal levels sometime this year, which would mark the first rate hike in nearly a decade.
Even before China’s stock market began to tumble this month and Greece teetered on the edge of leaving the eurozone, the Fed was questioning its stance on an interest rate increase planned for sometime later in 2015, minutes from the June FOMC meeting showed.
Nevertheless, most experts anticipate the Fed will remain on course to lift interest rates in September. The U.S. is overall a closed economy, as the amount of trade with other economies is fairly small relative to its size, says Steve Barrow, head of G10 strategy at Standard Bank.
“Therefore, the impact of international developments is probably not as significant of a factor for the Federal Reserve,” Barrow said. “Even if the situations in China or Greece were to deteriorate, they wouldn’t necessarily have spillover effects on the U.S. economy.”