By Jessica Menton -
U.S. stocks opened sharply higher Wednesday, with the Dow Jones Industrial Average soaring 200 points, as global shares seek to end the final day of the worst quarter in four years on a positive note. Global markets plunged in August on fears that China’s economic slowdown would spread globally, erasing nearly $11 trillion from the value of global shares from the July-September period.
September, historically the worst performing month of the year, has lived up to its expectations as being a rough month for equities. Adding to volatility this quarter were questions of whether the U.S. Federal Reserve will raise the cost of borrowing for the first time in nearly a decade.
“Stocks continue to struggle as the fears of uncertainties cast by the Federal Reserve Bank continue to hold investors hostage,” Peter Cardillo, chief market economist at Rockwell Global Capital, said in a research note Wednesday.
The Dow Jones Industrial Average (INDEXDJX:.DJI) leaped 228 points, or 1.4 percent, to 16,227. The Standard & Poor's 500 index (INDEXSP:.INX) added 28 points, or 1.5 percent, to 1,912. The Nasdaq composite (INDEXNASDAQ:.IXIC) gained 81 points, or 1.8 percent, to 4,599.
Investors are awaiting a speech from Fed Chair Janet Yellen Wednesday afternoon, which could provide more clues as to the timing of the central bank’s inevitable rate hike. Yellen, who is scheduled to speak at 2 p.m. EDT Wednesday at the St. Louis Fed community banking conference, said last week she expects the central bank to lift rates this year. Federal Reserve Governor Lael Brainard, who is a voting member of the Federal Open Market Committee, is also scheduled to speak at the conference at 7 p.m.
Investors are also weighing a looming government shutdown in the middle of the week, followed by a highly anticipated employment report for September -- due out Friday -- that might shed more light on whether the Fed will lift rates this year.
U.S. stock futures received a boost after more jobs were created in the private sector last month than previously expected. Private employers added 200,000 jobs in September, topping economists' expectations for a gain of 194,000 jobs, and up slightly from a gain of 186,000 the prior month, he ADP National Employment Report showed Wednesday.
The economic indicator is widely used as a pre-indicator for the U.S. labor market ahead of Friday's highly anticipated jobs report. Cardillo forecasts the U.S. economy added 197,000 jobs in September and anticipates the unemployment rate will hold steady at 5.1 percent.
The average monthly gain in payrolls has slowed from nearly 300,000 late last year. However, economists say employment growth at that pace was never going to be sustainable.
“Historically there are few times when payrolls have consistently risen by 200,000 per month for any extended period. As long as payroll growth doesn't dip below 120,000 a month, the unemployment rate, which is already at its long-run equilibrium rate, will continue to edge even lower,” Paul Ashworth, chief U.S. economist at Capital Economics, said in a note.
Global shares traded higher Wednesday, with China’s benchmark Shanghai Composite index closing 2.7 percent higher while Japan’s Nikkei index closed up 1.4 percent.
European stocks traded higher, with Germany's DAX and France's CAC up 2.4 percent and 2.6 percent, respectively.