Stocks rise modestly after early rally fades; Amazon sinks

FILE- In this Oct. 23, 2018, file photo specialist James Denaro works on the floor of the New York Stock Exchange. The U.S. stock market opens at 9:30 a.m. EDT on Monday, Oct. 29. (AP Photo/Richard Drew)

NEW YORK — U.S. stocks are mostly higher but have given up most of a big early gain Monday as a stretch of volatile trading that began early this month continues.

Banks and health care companies are rising and automakers are rallying following a report that China could cut its import tax on autos.

Stocks in Europe turned sharply higher. Italy's main stock index rallied after Standard & Poor's did not lower the country's credit rating.

KEEPING SCORE: The S&P 500 index added 18 points, or 0.7 percent, to 2,677 as of 1:20 p.m. Eastern time. Earlier it rose as much as 1.8 percent. The Dow Jones Industrial Average rose 63 points, or 0.3 percent, to 24,750. It was up 352 earlier.

The Nasdaq composite lost 4 points, or 0.1 percent, to 7,162. The Russell 2000 index of smaller-company stocks picked up 15 points, or 1.1 percent, to 1,499.

Stocks have plunged since early October and trading has been especially volatile the last few days. The S&P 500 is down 8.1 percent this month, which would be its worst monthly loss since May 2010.

DO YOU LIKE MY HAT? IBM said the purchase of Red Hat will help the company take the next step in cloud computing. Chairman and CEO Ginni Rometty said the deal will make IBM the world's biggest hybrid cloud provider, meaning it will offer companies a mix of on-site, private and third-party public cloud services. It's also the largest purchase in IBM's history.

Red Hat stock soared 42.7 percent to $166.49, reversing its losses from earlier this year. IBM fell 2.6 percent to $121.58.

CHANGING GEARS: Bloomberg News reported that regulators in China intend to propose cutting the tax on imported cars to 5 percent from 10 percent. The trade fight between the U.S. and China has hurt sales, and that slowdown is one of several factors that have damaged car company stocks this year.

General Motors jumped 3.1 percent to $33.67 and Ford climbed 4.3 percent to $9.37. Auto parts companies also rallied. BorgWarner jumped 5.5 percent to $40.16. After Cooper Tire & Rubber reported a bigger third-quarter profit than analysts expected, its stock surged 20.4 percent to $30.63.

THE QUOTE: "Once we have a sell-off and everything goes on sale, people typically go for the things that are of the highest quality that went on sale, not the cheap stuff," said Keith Parker, head U.S. equity strategy for UBS' investment bank.

Parker said stocks might settle down as companies start buying back more stock. Repurchases slow down around the times companies report their quarterly earnings. He said the stocks that perform the best will include companies that don't have too much debt and are able to handle costs including tariffs and higher wages and fuel prices.

EUROPE: Italy's FTSE MIB index rose 1.9 percent after Standard & Poor's did not downgrade the company's credit rating into "junk" status. Italy's new government plans to ramp up spending and European Union leaders have demanded it change its plans.

Germany's DAX rose 1.2 percent as Volkswagen, Daimler and BMW made big gains. Longtime Chancellor Angela Merkel said she won't leave office following weak state election results, but will step down as leader of her party. She has been chancellor of Germany since 2005 and will stay in office until 2021.

The CAC 40 in France added 0.4 percent and the British FTSE 100 rose 1.3 percent.

MORE TECH LOSSES: Amazon dropped another 4.5 percent to $1,568.43. The online retailer tumbled 7.8 percent Friday after it reported weak sales and gave a lower-than-expected revenue estimate for the quarter that includes the holiday shopping season. Amazon is on pace to enter a "bear market," a Wall Street term that means a decline of more than 20 percent from a recent peak. Amazon traded above $2,000 a share in early September.

Some early gains for tech and internet stocks also faded. Microsoft shed 1.5 percent to $105.36. Alphabet, Google's parent company, lost 1.8 percent. The stock slipped 1.8 percent Friday after Alphabet reported less revenue than analysts expected in the third quarter, and investors worried that regulators might make it tougher for the company to collect data.

BRAZIL: Brazil's Bovespa rose in morning trading after far-right politician Jair Bolsonaro was elected president, but it later turned lower and fell 0.7 percent. Stocks climbed earlier this month after Bolsonaro led the previous round of voting, as investors preferred him to leftist parties.

The former army captain who cast himself as a political outsider despite a 27-year career in Congress and rose to power by mixing hard right positions with tough, often violent words about women, gays and black and indigenous Brazilians.

BONDS: Bond prices fell. The yield on the 10-year Treasury note rose to 3.11 percent from 3.07 percent.

ENERGY: Benchmark U.S. crude dropped 0.5 percent to $67.21 per barrel in New York while Brent crude, used to price international oils, lost 0.1 percent to $77.51 per barrel in London.

CURRENCIES: The dollar rose to 112.51 yen from 111.85 yen. The euro fell to $1.1377 from $1.1412.

ASIA: Tokyo's Nikkei 225 sank 0.2 percent and Seoul's Kospi lost 1.5 percent. Hong Kong's Hang Seng advanced 0.4 percent.

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AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP

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