By Geoffrey Smith
Investing.com — U.S. stock markets opened higher on Tuesday, helped by rising hopes of a delayed withdrawal of monetary stimulus by the Federal Reserve and by a sharp shift in sentiment in China that also supported commodities prices.
By 9:45 AM ET (1345 GMT), the Dow Jones Industrial Average was up 55 points, or 0.2% at 35,390 points. The S&P 500 was up 0.2% and the Nasdaq Composite was up 0.4% at a new record high.
The market was supported by growing expectations that the Federal Reserve will wait until at least December before it starts to run down its bond purchases, which currently total $120 billion a month. Many who had originally expected Fed Chairman Jerome Powell to signal a ‘tapering’ at this week’s Jackson Hole symposium now expect a more equivocal message.
Chinese ADRs were among the stars in early trading, with Alibaba ADRs (NYSE:BABA) rising 5.3% and Pinduoduo (NASDAQ:PDD) rising 17%, as both Chinese and U.S.-based investors took to bargain hunting after a massive sell-off sparked by regulatory concerns.
Pinduoduo’s rise was all the more remarkable for the fact that the e-commerce company’s second-quarter sales grew more slowly than expected, by a mere 89%. While it turned its first-ever profit in the quarter, it said it would give this and its first 10 billion yuan ($1.5 billion) of profits away to Chinese farmers. The move suggests that the company leadership has taken on board warnings of the need to reduce inequality in the country – a realization that may spare it any heavier regulatory intervention in future.
Elsewhere, JD.com ADRs (NASDAQ:JD) were up 10.7% after reports said that Cathie Wood’s ARK Invest firm was sufficiently impressed by its second quarter results to get back into Chinese stocks, which her firm had all but exited earlier in the year. Search giant Baidu ADRs (NASDAQ:BIDU) rose 6.2% and Tencent Holdings ADRs (OTC:TCEHY) rose 7.6%, also helped by Monday’s buyback announcement.
Other stocks benefiting from expanded or accelerated buyback were Palo Alto Networks (NYSE:PANW) stock, which also reported a hefty rise in billings due to increased cyber-security demand arising from the spread of remote working, and Cigna (NYSE:CI) stock. Palo Alto rose 16% to a new all-time high, while Cigna rose a more modest 2.1%, still struggling to recover from its 2021 low
Elsewhere, Best Buy Co Inc (NYSE:BBY) stock rose 5.6% after beating estimates for its second-quarter profit and forecasting that demand for the many electronic goods most associated with working from home looked set to stay strong, given the continuing uncertainty over the course of the pandemic. With new Covid-19 cases hitting a seven-month high and deaths averaging over 1,000 a day over the last week, a full return to pre-pandemic conditions still seems a long way off.
On a light day for the data calendar, new home sales broke a three-month falling streak to edge up to 708,000 in July. June’s figures were revised up by a respectable 25,000 to 701,000.
Oil stocks, meanwhile, were supported by Monday’s sharp rally in crude that followed the shift of mood in China. Chevron (NYSE:CVX) stock rose 1.8%, while Exxon Mobil (NYSE:XOM) stock rose 0.7%.