Aug. 25--The Dow Jones industrial average soared about 400 points in early trading Tuesday as U.S. markets ignored another sell-off in China and surged higher, partly reversing a severe drop over the prior three sessions. European stocks also rose.
The blue-chip Dow Jones index jumped 402.70 points, or 2.5%, to 16,274.05 in morning trading after plunging 8.5% over the last three sessions.
All 30 of the Dow's component stocks were higher. Apple Inc. gained 5.6%, Walt Disney Co. was up 3.6% and Exxon Mobil Corp. rose 3.1%.
The broader Standard Poor's 500 index gained 50.81 points, or 2.7%, to 1,944.02 and the Nasdaq composite index rose 152.74 points, or 3.4%, to 4,678.99.
Monday's declines had placed the major averages 10% or more below the record highs they reached earlier this year, a drop known on Wall Street as a "correction" that's typically seen as a welcome breather to help stocks rally further in the months ahead.
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After seeing stocks fall sharply in the prior three sessions, "people were saying that was the first corrective wave, but we're unlikely to fall 20%," so current levels were an appealing entry point to buy, said Bill King, chief market strategist at M. Ramsey King Securities in Burr Ridge, Ill.
He noted, however, that with many traders and portfolio managers on summer vacation, "the markets remain extremely thin," and that could lead to more volatile swings in prices.
The gains in U.S. share prices Tuesday followed rallies on European and some Asian markets, even though Chinese stocks continued to tumble.
Key market indexes in South Korea, Taiwan, Germany and France were up.
China's benchmark markets gauge, the Shanghai composite index, dropped an additional 7.6% Tuesday, and it's now plunged 40% from its June high.
Concerns about China's slowing economic growth and the financial impact it could have on other major countries have been the main factors driving stock prices lower around the world in recent days.
But China's central bank announced Tuesday it was cutting its benchmark interest rate to foster more lending, and also said it pumped more than $23 billion into its financial system to increase liquidity in the market.
MORE ON STOCK MARKET:
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UPDATE
8:43 a.m.: This article has been updated with analyst comments and the latest stock market figures.
