Stocks rise modestly after early rally fades; Amazon sinks

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.

German stocks rose even though longtime German Chancellor Angela Merkel said she won’t run for another term in 2021.

KEEPING SCORE: The S&P 500 index added 12 points, or 0.5 percent, to 2,670 as of 12:45 p.m. Eastern time. Earlier it rose as much as 1.8 percent. The Dow Jones Industrial Average rose 85 points, or 0.3 percent, to 24,773. It was up 353 earlier.

The Nasdaq composite lost 36 points, or 0.5 percent, to 7,130. The Russell 2000 index of smaller-company stocks picked up 8 points, or 0.6 percent, to 1,492.

Stocks have plunged since early October and trading has been especially volatile the last few days. The S&P 500 staged a big rally Thursday, and then gave up virtually all of those gains Friday before climbing Monday. The S&P 500 is down 8.4 percent this month, which would be its worst monthly loss since February 2009, near the market’s low point during the 2008-09 financial crisis.

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 44.9 percent to $169.11, reversing its losses from earlier this year. IBM fell 2.5 percent to $121.71.

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 2.4 percent to $33.44 and Ford climbed 3.5 percent to $9.29. Auto parts companies also rallied. BorgWarner jumped 5.4 percent to $40.11. After Cooper Tire & Rubber reported a bigger third-quarter profit than analysts expected, its stock surged 17.9 percent to $30 and Goodyear gained 4.8 percent to $21.32.

EUROPE: Italy’s FTSE MIB index rose 2 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 1.4 percent after Merkel said she won’t seek a new term. She has been chancellor of Germany since 2005, and is also stepping down as leader of her party after 18 years.

The CAC 40 in France added 0.6 percent and the British FTSE 100 rose 1.4 percent.

MORE TECH LOSSES: Amazon dropped another 5 percent to $1,560.49. 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 1.7 percent to $105.21. Alphabet, Google’s parent company, lost 2.2 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. Netflix sank 5.5 percent to $283.33.

BRAZIL: Brazil’s Bovespa rose in morning trading after far-right politician Jair Bolsonaro was elected president, but it later turned lower and fell 0.9 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 $67.23 per barrel in New York while Brent crude, used to price international oils, lost 0.5 percent to $77.24 per barrel in London.

CURRENCIES: The dollar rose to 112.39 yen from 111.85 yen. The euro fell to $1.1387 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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