US open: Stocks record early gains but investors remain cautious

As of 1535 GMT, the Dow Jones Industrial Average was up 0.65% at 28,721.56, while the S&P 500 was 0.81% stronger at 3,269.94 and the Nasdaq Composite was 1.09% firmer at 9,239.00.

The Dow opened 185.76 points higher on Tuesday after recording its worst day in four months in the previous session as confirmed worldwide cases of the Wuhan coronavirus hit 2,862 and continued to rise.

Market participants remained concerned regarding the potential impact of the coronavirus on the global economy of late, with shares of travel companies and consumer goods firms with Chinese dealings taking some of the biggest hits on the Street.

Chinese authorities said on Tuesday that the outbreak has now killed 106 people and infected a further 4,515.

IG's Chris Beauchamp said: "Calm has descended across global markets after yesterday’s selloff. Perhaps investors have decided that the virus in China, while serious, does not represent an existential threat to civilisation.

"Markets are not really geared up in the short-term to assess the impact of a global virus. This still leaves us open to further falls if it becomes clear that infection is spreading more rapidly, but for now equity markets are entering a process of stabilisation."

Beauchamp noted that investors were evidently torn between worrying that the past week was the beginning of a January 2018 rerun and fearing that the rally would shortly resume.

"Perhaps this one is ‘the big one’, but given the number of false crises over the past year the smart money is probably going to buy the dip," he added.

Analysts at Rabobank on the other hand cautioned that comparisons with the 2003 SARS epidemic could be wide of the mark because China's role in the global economy and the financial leverage in it had multiplied several times over since then.

"There is clearly a great deal of uncertainty over how things will play out over the coming weeks, but it now looks as though regional growth will slow sharply in the first quarter. Economic activity should rebound if/when the virus is brought under control," chipped in Gareth Leather at Capital Economics.

Elsewhere, the UK revealed it will allow Chinese telco giant Huawei to play a limited role in the roll-out of its next-generation 5G mobile networks.

The move was seen as potentially putting further pressure on relations between London and Washington following a White House campaign aimed at having the Chinese firm blocked from as many markets as possible.

In corporate news, 3M shares were down in early trade after revealing that it would be cutting 1,500 jobs following a quarterly earnings miss, while United Technologies posted better-than-expected quarterly revenues and profits as it continued to progress on spinning off its activities outside of the aerospace field and its merger with Raytheon.

Apple, Starbucks and eBay will all report after the close on Tuesday.

On the macro front, orders for goods made to last more than three years shot higher at the end of 2019, but the details of the report revealed nearly across-the-board weakness outside of defence spending.

According to the Department of Commerce, in seasonally adjusted terms, total durable goods orders grew by 2.4% month-on-month to reach $245.48bn, which was double economists' forecasts.

However, December's increase was entirely the result of a 90.2% jump in defence capital goods to $19.19bn, led by a 168.3% surge to $5.89bn in those for defence aircraft and parts.

Elsewhere, US house prices rose more than expected in November, according to the S&P/Case-Shiller national home price index.

The 20-city composite index increased 2.6% year-over-year following a 2.2% jump the month before, beating expectations for a 2.4% rise.

Lastly, the Conference Board's consumer confidence index revealed a very solid overall figure for December.

The headline confidence index rose to 131.6 from 128.2 - above the consensus 128.0 to be the highest reading since November 2018.