US open: Stocks rise on China stimulus hopes, oil price rebound

US stocks gained in early Wednesday trade as hopes of further stimulus measures in China followed an unexpected slowdown in economic growth in the fourth quarter.

The Dow Jones Industrial Average rose 0.83%, the Nasdaq increased 0.86% and the S&P 500 climbed 0.73% at 1446 GMT.

China’s gross domestic product rose 6.8% in the fourth quarter compared to the same period a year ago, weakening from the previous quarter’s 6.9%. Analysts had expected GDP to remain unchanged from the third quarter, while the government is targeting 7% growth.

“On this occasion, I think the markets may have been relieved that the numbers were not as bad as they could have been, given the challenges facing the economy during this period of transition and slowing global growth,” said Craig Erlam, senior market analyst at Oanda.

“There is also the fact that there is still plenty of scope for fiscal and monetary stimulus to plug any gaps that appear in the coming years during this period of transition, which occurs at a time when the country is also trying to liberalise its markets, something that has faced many challenges already and will likely continue to do so this year.”

Separately data showed Chinese retail sales rose 11.1% year-on-year in December, missing expectations for an 11.3% increase. Industrial production climbed 5.9% in December from a year ago, below estimates for a 6% gain.

Meanwhile, oil prices recovered slightly with West Texas Intermediate crude up 0.3% to $29.06 per barrel and Brent crude up 1.8% to $29.09 per barrel at 1450 GMT.

A warning from the International Energy Agency that crude oil is expected to remain oversupplied until at least late this year didn’t seem to bother the market. The IEA said oil prices will fall further as supply exceeds demand, while Iran’s return to the market is unlikely to be balanced out by production cuts from other countries.

In company news, Morgan Stanley rallied after it revealed it swung to a profit in the fourth quarter. It followed the company’s steps to restructure its struggling Fixed Income business.

Bank of America declined despite posting better-than-expected earnings for the three months to the end of December, as expenses fell.

Twitter was down 1.8% after the social media company's service went offline for more than two hours.

The dollar rose 0.54% against the pound and increased 0.28% against the yen but fell 0.12% versus the euro.