Stock Market Today: Nasdaq Rises After Entering Correction Territory, Bond Yields Fall

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Stocks were rebounding Thursday as China slashed interest rates and U.S. bond yields were lower. 

Shortly after the open, the

Dow Jones Industrial Average
rose 294 points or 0.8%, after the index dropped 339 points Wednesday. The

S&P 500
gained 1%, with the technology-heavy

Nasdaq Composite
rising 1.6%. The S&P 500 and Nasdaq fell 1% and 1.2%, respectively, in the previous session.

“China made two surprise interest rate cuts overnight, helping stocks bounce,” wrote Tom Essaye, founder of Sevens Report Research. 

The People’s Bank of China cut its one-year prime loan rate to 3.7% from 3.8% and its five-year prime loan rate to 4.6% from 4.65%. That’s a positive for the world’s second largest economy, which is slowing down and is home to sales at many large U.S. companies. 

That’s certainly helping the stock market, but there’s another positive factor that’s buoying technology stocks in particular: U.S. bond yields were down a tick. The 10-year Treasury yield was down to 1.83% from a Wednesday closing level of 1.87%. Lower long-dated bond yields make future profits more valuable—and many tech companies are counting on sizable profits many years into the future. 

Thursday’s early rally in tech stocks comes after the Nasdaq fell into correction territory, down just over 10% from its late November all-time high to Wednesday’s close. Since the index’s high, the 10-year yield has risen from 1.55% as the Federal Reserve plans to lift short-term interest rates and reduce its bond portfolio, which drives less money into the bond market, lowers bond prices and lifts their yields. 

But yields aren’t the only thing that will capture investors’ attention Thursday. Fourth-quarter earnings are rolling in. In the spotlight will be results from Netflix (ticker: NFLX) as well as American Airlines (AAL). Companies have been largely surpassing earnings expectations early in the reporting season.

So earnings could be a savior for the market right now. ““Solid growth in the economy and profits should preclude anything more than a 10.0% correction in the major equity indexes,” wrote John Lynch, chief investment officer for Comerica Wealth Management.

Elsewhere, initial weekly jobless claims were 286,000, worse than the expected 225,000 and an increase from last week’s result of 230,000.

The pan-European

Stoxx 600
was up 0.3%. In Asia the mood was upbeat: China cut its benchmark mortgage lending rate for the first time in nearly two years, and data showed Japanese exports soared 17.5% last month, ahead of expectations. Hong Kong’s

Hang Seng Index
rose 3.4%.

Here are five stocks on the move Thursday:

Unilever

(UL) stock was down 0.4% after the company said it had abandoned its $68 billion bid for

GlaxoSmithKline

‘s (GSK) consumer healthcare business. GSK stock was down 1.7%.

China cutting benchmark rates gave Chinese tech stocks a boost, on top of the rebound among U.S.-listed tech companies.

Alibaba

(BABA) and

JD.com

(JD) shot up in Hong Kong trading, with their U.S. listed shares up 5.3% and 7.7%.

United Airlines

(UAL) stock slid 0.4% after the company reported a loss of $1.60 a share, better than the expected loss of $2.11 a share, on sales of $8.19 billion, above expectations for $7.97 billion. 

Alcoa

(AA) stock gained 1.8% after the company reported an adjusted profit of $2.50 a share, beating estimates of $1.93 a share, on sales of $3.3 billion, above expectations for $2.4 billion. 

Write to Jack Denton at jack.denton@dowjones.com and Jacob Sonenshine at jacob.sonenshine@barrons.com