American Stocks Stabilize After Global Weakness

United States stocks opened higher Tuesday and European indexes were recovering after Wall Street had its worst day of the year on Monday.

European markets fell in morning trading, but by the afternoon, the Euro Stoxx 50 was climbing back.

Stocks in the United States opened higher, helped by corporate results. At about 11 a.m., the Standard & Poor’s 500-stock index had risen 7 points, or 0.4 percent, to 1,749. The Dow Jones industrial average was up 36 points, or 0.2 percent, to 15,409. And the Nasdaq composite gained 20 points, or 0.5 percent, to 4,017.

The tumult occurred amid continuing signs that the turmoil in emerging markets is spreading to the developed world.

Asian markets sustained a difficult day, with the Tokyo benchmark Nikkei 225 stock average down 4.2 percent to its lowest close since early September, and the Hang Seng index in Hong Kong 2.9 percent lower. Investors have been bailing out of Japanese stocks as the country’s currency, the yen, has risen. Investors fear that the strong yen, which is the result of a flight to quality from the instability in emerging markets, will take a bite out of corporate profits and undermine Prime Minister Shinzo Abe’s economic revitalization program.

“The yen is a key reason,” said Imran Khan, a trader at Sunrise Brokers in Hong Kong, adding that investors were taking a “wait-and-see” stance as they looked toward corporate earnings.

On Monday, the selling accelerated in New York after a survey of the manufacturing industry showed production had fallen to its lowest level in eight months. It was the latest indication that the broad-based equity rally that made stocks a stellar investment in 2013 might have run out of steam.

“Broadly what we’re seeing is a flight to quality, away from emerging markets and into U.S. Treasurys and other safe assets,” Alex Stanley, a strategist at CBA Europe in London, said. “We’re seeing all the hallmarks of previous flare-ups in emerging markets.”

“I think we’ll continue to see these flare-ups,” Mr. Stanley added, “but I don’t think it’s the case that investors will flee emerging markets to the extent that there’s another crisis.”

Mr. Stanley noted, however, that the optimistic case was predicated on the view that growth would remain relatively robust in the United States. Challenges to that view, like the disappointing manufacturing report on Monday, have an outsize effect on market confidence. And if the data remains weak, “it will be time to reassess that view,” he said.

This week’s litany of troubles, analysts said, included receding Federal Reserve support for the United States economy and cooling growth in China, along with the uncertainties that accompany the economic overhauls that the authorities in Beijing are trying to engineer. There are also country-specific issues like political uncertainty in Turkey.

“A combination of tapering, a confluence of country-specific emerging market country concerns and weaker growth in China provide the backdrop for a volatile few weeks if not longer, ahead,” analysts at Crédit Agricole wrote in a note on Tuesday.

Some of the hardest-hit markets have been developing economies like Turkey, Argentina and South Africa, which run current account deficits. Investors worry that tapering — the reduction of Fed stimulus — could reduce or reverse inflows of cash into those markets, making it hard for them to finance themselves. The South African and Turkish currencies have sagged about 6 percent against the dollar since the start of this year, while the Argentine peso has plunged nearly 20 percent.

Emerging Asian markets, too, have fallen in recent weeks, though the declines in their stocks and currencies have been much less drastic.

The mainland Chinese market is closed for five days and will reopen on Friday.

In Japan, investors are getting nervous about the potential effects of a consumption tax increase in April — a move that is seen as critical to Japan’s broader economic overhaul but that risks reducing consumer demand in the short term.

The dollar peaked against the Japanese currency in mid-January, trading above 105 yen. It has since fallen back to about 101.35 yen. The Nikkei, which surged nearly 57 percent last year, has declined by 14 percent so far this year. It remains about 60 percent higher than it was in late 2012 before the introduction of “Abenomics,” a program including aggressive monetary stimulus from the Japanese central bank.

The dollar gained slightly against the yen and euro on Tuesday, but was modestly weaker against the British pound. Emerging market currencies like the Turkish lira, Hungarian forint and South African rand all strengthened against the U.S. currency.

Investor unease led Russia on Tuesday to cancel a planned debt auction for a second straight week. The decision to halt the auction was made “with a view to the current market conditions,” according to the Finance Ministry’s website.