Premarket: Global stocks bounce back in whiplash reversal

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Wall Street futures rise following Monday’s brutal decline

Global stocks rallied on Tuesday, partly reversing some of the previous day’s brutal declines, while the Japanese yen retreated modestly, after central bank officials said all the right things to soothe investor nerves.

The S&P 500 lost 3% on Monday, while the Nasdaq slumped 3.43%, extending a recent sell-off as fears of a possible U.S. recession spooked global markets.“If you wake up in the morning to discover that Japan is down 10-12%, it’s going to scare the daylights out of the sanest person in the world, so it’s understandable that people take flight,” IG chief market strategist Chris Beauchamp said.

“The Nikkei’s enjoying a decent retracement against Monday’s plunge, as comments from the Fed’s Daly and a stronger-than-expected ISM services report soothed fears of a panic Fed cut next week,” said Matt Simpson, a senior market analyst at City Index in Brisbane. Treasury yields had also come off their lows, in part in reaction to a rebound in the U.S. ISM services index to 51.4 for July. In particular, its employment index jumped 5 points to 51.1, suggesting last week’s payrolls report may have overstated the weakness in the labor market.

Market expectations the Fed would cut by 50 basis points at its September meeting remained intact, with futures implying a 71% chance of such an outsized move.

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