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* Ten of 11 major S&P 500 sectors trading higher
* China service sector activity rises to 3-mth high
* Indexes up: Dow 0.81%, S&P 0.93%, Nasdaq 1.16%
(Updates to early afternoon)
By Uday Sampath Kumar
Sept 4 (Reuters) - Wall Street's main indexes rose on
Wednesday as fears of a global economic slowdown were calmed by
robust economic data from China, while easing tensions in Hong
Kong added to an upbeat mood.
Activity in China's services sector expanded at the fastest
pace in three months in August, providing a boost to the world's
second-largest economy that has been struggling to reverse a
prolonged slump in its manufacturing sector. The mood also got a lift after Hong Kong leader Carrie Lam
withdrew an extradition bill that had triggered months of often
violent protests in the Chinese-ruled city.
"This is a sentiment driven market and whenever you get news
like this, while it may not directly impact the U.S., it causes
a ripple effect," said Ryan Nauman, market strategist at Informa
Financial Intelligence in Lake Taho, California.
Markets struggled last month as escalating trade tensions
and the inversion of a key part of the U.S. yield curve, often
seen as a sign of recession, drove investors away from risky
assets and pushed the S&P 500 .SPX to log its worst August in
four years.
A contraction in U.S. factory activity in August and new
rounds of tariffs from the Washington and Beijing only added to
those concerns on Tuesday, pulling the Dow Jones Industrial
Average .DJI and Nasdaq .IXIC down over 1%.
However, risk sentiment improved on Wednesday, pushing the
benchmark U.S. Treasury 10-year yield US10YT=RR higher, with
the yield curve at its steepest in more than two weeks. US/
Helping cool slowdown concerns were comments from New York
Federal Reserve President John Williams (NYSE:WMB) who said the economy
appeared to be in a good place and he is ready to "act as
appropriate" to help avoid a downturn. Technology stocks .SPLRCT led gains among the 11 major S&P
sectors with a 1.6% rise and provided the biggest boost.
The U.S. nonfarm payrolls report due Friday will also be a
critical piece of data, with some analysts cautioning that any
weakness could be taken as a signal that the domestic economy is
slowing.
"The strong labor market and consumer is what's driving
economic growth and if we start seeing cracks in the labor
market, that would give me pause that a recession is on the
horizon," Nauman said.
However, he added weakness in the labor market could
pressure the Federal Reserve to cut interest rates by as much as
50 basis points in its mid-September meeting. Market
participants are currently expecting a quarter percentage point
At 12:55 p.m. ET, the Dow .DJI was up 211.68 points, or
0.81%, at 26,329.70 and the S&P 500 .SPX was up 26.93 points,
or 0.93%, at 2,933.20.
The Nasdaq Composite .IXIC was up 91.56 points, or 1.16%,
at 7,965.72.
Tyson Foods Inc (NYSE:TSN) TSN.N shares fell 6.12% to the bottom of
the S&P 500 after the United States' biggest meat processor cut
its 2019 earnings forecast.
Starbucks Corp SBUX.O dropped 1.02% after the company said
it expects 2020 adjusted profit growth to be lower than 2019 as
it factors in the impact of a one-time tax benefit that has
inflated its bottom line this year. Advancing issues outnumbered decliners by a 3.99-to-1 ratio
on the NYSE and by a 2.06-to-1 ratio on the Nasdaq.
The S&P index recorded 61 new 52-week highs and three new
lows, while the Nasdaq recorded 54 new highs and 64 new lows.