Stocks bounce back after early losses

U.S. stocks continued to march back from a morning rout that surpassed 2 percent, as dip buyers emerged after major indexes slid below key technical levels. Treasury yields fell and crude oil tumbled.

The S&P 500 pared to 0.2 percent a loss that took it below 2,700 for the first time since July, while the Nasdaq Composite Index flirted with a correction before rebounding to be little changed. Defensive sectors from consumer staples to real-estate firms led the recovery. Verizon and McDonald’s advanced on solid results, while Netflix led gains in tech shares.

Industrial stocks remained under pressure after disappointing results from Caterpillar and 3M added to worries that rising costs will erode profit margins. The Russell 2000 Index erased gains for the year. Energy producers in the S&P 500 sank more than 2 percent. Texas Instruments reports results after the market closes.

“Today we opened down, basically at technical support at 2,700 on the S&P, 7,000 on the Nasdaq 100, this is kind of a picture-perfect day to buy,” said Michael O’Rourke, JonesTrading’s chief market strategist. “But now the question is how far does this rally get, how far does it go?”

The afternoon rebound in American equities delivered a measure of calm for investor nerves frayed by a monthlong sell-off. U.S. growth data later in the week as well as earnings from companies including Amazon, Alphabet, Microsoft and Intel could be key to where equities go from here. In the meantime, uncertainty over the death of a Saudi journalist, Italy’s budget and Brexit are among the factors weighing on sentiment.

The Stoxx Europe 600 Index slid to the lowest level since December 2016 and Asian equities teetered on the verge of a bear market. Some of the steepest losses were in Japan, Hong Kong and China, where shares had posted the biggest jump in more than two years a day earlier.