By David Hodari 

Stocks opened higher Tuesday, following a sharp drop on Wall Street at the start of the week amid rising anxieties about global economic growth.

The Dow Jones Industrial Average rose 198 points, or 0.9%, in the opening minutes of trading, in a mild relief rally after both it, the S&P 500 and the Nasdaq Composite all tumbled 2% on Monday. The S&P and Nasdaq also opened higher.

In Europe, the pan-continental Stoxx Europe 600 index was 0.1% lower in late-morning trading, weighed down by a 1.2% fall in its oil-and-gas sector as concerns over rising supply dragged oil prices lower.

The fall in crude began late Monday and accelerated Tuesday, with prices dropping to fresh 14-month lows. Brent crude oil, the global benchmark, was down 2.6% to $58.07 a barrel and West Texas Intermediate futures fell 2.9% to $48.45 a barrel. Analysts cited the broader market selloff and persistent fears of growing supply.

Stocks sold off more heavily in Asia, where Japan's Nikkei fell 1.8% and Hong Kong's Hang Seng traded 1.1% lower. Most other indexes fell by slightly less.

"The selloff has continued to be orderly and when I see moves like this, I think it's not aggressive sellers as much as it's a lack of buyers," said JJ Kinahan, chief market strategist at TD Ameritrade.

U.S. stocks staged their latest sharp selloff Monday, with a 2.3% fall for the Russell 2000 index of small-capitalization stocks putting it in bear market territory. The Dow's 2% drop, meanwhile, was the index's fourth such drop so far this month. The last time that index had more 2% daily selloffs in December was in 2008 when it had five such days.

The latest criticism of the Federal Reserve from President Trump -- ahead of the central bank's December policy meeting Wednesday -- added to investors' unease. Mr. Trump tweeted that it was "incredible" that the Fed's board was considering raising interest rates again.

While U.S. futures pointed to gentle gains Tuesday, the gloom that has descended on markets in recent months is unlikely to shift, some investors said.

"There's definitely a lot of concern out there," said Matthew Turner, European economist at Macquarie. "We still think the data point to trend growth but markets are forward-looking and if you look at the history of equities prices, they tend to peak before recessions start. They can, by themselves, push us towards one."

Stubborn worries that global growth is slowing have echoed in equities markets in recent months, with 53% of fund managers surveyed in Bank of America Merrill Lynch's monthly report expecting weakening global growth in 2019--the worst outlook since October 2008.

Meanwhile, a lack of detail behind warmer trade rhetoric between Washington and Beijing mean investors will begin 2019 on an uncertain footing, with businesses currently stymied by a lack of information.

The Federal Reserve's policy announcement may provide some short-term clarity on the investing environment, but "tariffs are the A, B and C story. When we have detail on interest rates and tariffs, you can make decisions down from CEOs to investors," Mr. Kinahan of TD Ameritrade said.

CME Group data gave a 71.5% probability to a Fed rate increase, although accompanying remarks about future policy from Fed Chairman Jerome Powell will be under scrutiny for clues about the path of rates next year.

Mr. Powell has given mixed signals on Fed policy in recent months, spooking investors in October by saying rates were "a long way from neutral," referring to the point at which interest rates are neither spurring nor slowing economic growth. He later backtracked on those comments in November, saying rates were "just below" neutral.

Dovish guidance from the Fed may have mixed implications for markets, however.

"On the one hand, markets may see an even-less-hawkish-than-expected hike as a relief, but if the Fed acknowledges fears about growth it's not as straight forward," said Geoffrey Yu, head of the London investment office at UBS Wealth Management. "Right now, we're at a level where market pricing is not consistent with underlying economic data."

The WSJ Dollar Index was last 0.2% lower, while the yield on 10-year U.S. Treasurys had last slipped to 2.833% from 2.857% late Monday.

In commodities, oil market investors were awaiting American Petroleum Institute inventory numbers, due Tuesday.

The Organization of the Petroleum Exporting Countries and its allies agreed to a production cut in Vienna on Dec. 7, but that restriction isn't set to take effect until Jan. 1.

Gold was up 0.1% at $1,252.80 a troy ounce.

Write to David Hodari at David.Hodari@dowjones.com

(END) Dow Jones Newswires

December 18, 2018 09:46 ET (14:46 GMT)

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