A five-day rout was put to rest yesterday, with a 1% gain for the S&P 500 and other indexes. Dead-cat bounce? The Federal Reserve may chart out the fortunes for this market, depending on what’s in its statement later.

Investors will comb through the Fed’s words for clues to a September hike, though they may get fewer hints than they’re hoping for.

But they may stay away from Internet stocks, after Twitter’s earnings call got messy and Yelp disappointed. Can Facebook rally the sector with results later? The pressure is on, as those shares have run up 15% in the last three months. At least the social-media group now has a what-not-to-say-at-your-conference-call blueprint to work off. Here’s what to expect from Facebook.

For now, Wall Street is starting to look a little cautious at the open, even after a late rally on the Shanghai Composite turned a wobbly session into a winner. As U.S. markets slowly (or not) adjust to the Chinese ups and downs, a nagging question remains: Just how much can the rest of the world shake off a slowdown in that country?

“In many sectors, Chinese consumption now eclipses the U.S. From oil to cars to smartphones, China is where the action is. And if China has a hard landing, so does the global economy,” said SouthBay Research’s Andrew Zatlin, cited in a WSJ MoneyBeat. report

The chief fear is that commodities will get hit by a China pullback. U.S. oil prices managed a decent gain yesterday, after several down sessions, but wariness abounds.

“We have been down the last few days, so a little short-covering rally is not surprising,” Tariq Zahir, managing member at Tyche Capital Advisors, told MarketWatch’s Myra P. Saefong. “Bear-market rallies can be fast and violent.”

That brings us to our call of the day. What if the commodity slump has nothing to do with worries of a collapse in the global economy, but everything to do with the dollar? Then there’s no better time to buy commodities, says one strategist.

Key market gauges

Futures on the Dow US:YMU5, S&P US:ESU5 and Nasdaq US:NQU5 hav e pared back some gains and are largely flat. Asia ADOW, -0.28% was largely quiet ahead of the Fed, outside of that late-session rally for the Shanghai Composite SHCOMP, -0.53% . Europe SXXP, -3.24% is also marginally up.

Crude CLU25, is slightly lower, while gold US:GCU5 is holding just below $1,100 an ounce. The dollar DXY, -0.10% has also pulled back a little.

The quote

“We do not expect to see sustained, meaningful growth in (active users) until we start to reach the mass market. We expect that will take a considerable period of time.” — Twitter CFO Anthony Noto’s comment on the earnings call yesterday that sent shares reeling.

The call

Wells Capital’s chief investment strategist Jim Paulson says there’s no better time to get back into commodities than right now. He disagrees with the view held by some right now that the bottom will keep falling out of commodity prices and the dollar will keep rising.

“We believe recent volatility in the U.S. commodity markets probably represents a normal (and highly emotional) bottoming process after a severe decline last year, rather than increasing evidence of a global slowdown,” notably in China, says Paulson. “Likewise, we think the U.S. dollar is probably in a peaking process.”

If Paulson’s theory is correct, that could trigger “significant financial turbulence, since many portfolios will need to be adjusted”, he says. And there would also be some adjustment needed to the Fed’s exit strategy.

What to do? Paulson believes markets are in the “late stages of a selling climax in commodities and commodity-related securities”. He suggests investors take advantage of the recent selloff and increase their exposure to commodities and related stocks, as well as to commodity-biased stock markets such as Canada and Australia.

“We also think emerging markets will do well once the U.S. dollar peaks, renewing some strength in commodity prices,” Paulson says.

Not everyone agrees. Cam Hui, writing on the Humble Student of the Markets blog, made the case earlier of steering well clear of Canada.

And from MarketWatch, gold may hit $350 an ounce. A tough market to call, clearly.

The chart

Could UPS’s UPS, +0.87% view of a slowing economy and weakness in the Dow transports be the canaries in the coal mine for the Dow industrials? MarketWatch’s Tomi Kilgore notes that Dow transports have lost 9.4% this year, while the Dow industrials DJIA, -1.84% is off 1.1%. UPS, the biggest member of the Dow transports DJT, -2.64% , is down 10% year to date, even though it climbed over 5% on Tuesday after results.

“According to the Dow Theory of market analysis, which has remained relevant among market watchers for over a century, members of the Dow transports are believed to have their finger on the pulse of the economy. That’s because they act as the link between those who make the goods—members of the Dow Jones Industrial Average—and those who consume them,” writes Kilgore.

“So when the Dow transports and UPS stock underperform the broader market, it could portend weakness in the broader market,” he says.

Here’s his chart:

The economy

Pending home sales for June are coming at 10 a.m. Eastern, with a Fed announcement due at 2 p.m.

The stat

Is the Chinese economy growing 7%? Try “more like 4 or so.” Kerr Neilson, Aussie billionaire and founder of Platinum Asset Management, pours a lot of cold water on China’s second-quarter growth estimates.

Earnings

Twitter TWTR, -0.62% is down 11% in premarket trading after company executives gave a lengthy timeline for user growth.

Meanwhile, Yelp YELP, -0.92% swung to a loss last night. Shares tanked and are off another 20% this morning.

Gilead GILD, -1.29% beat the Street with its results and shares are up 4%.

Altria MO, -2.56% is up on results and Humana HUM, -2.01% barely moving on a profit gain bell. Facebook FB, -1.73% and Whole Foods US:WFM are coming after the bell. Check out MarketWatch’s Earnings Wall.

The buzz

As expected, Procter & Gamble PG, -0.48% said it would replace Chief Executive A.G. Lafley with insider David Taylor.

Apollo Education US:APOL is off 8% after disclosure of a FTC civil probe.

Belgian-based Solvay SOLB, -6.61% is buying Cytec Industries US:CYT for $5.5 billion. Cytec shares are up about 28%.

Disneyland Paris, owned and operated by Euro Disney FR:EDL, (The Walt Disney Co. DIS, -2.50% has a minority stake) is facing an EU probe over allegations it charged British and German visitors more to visit the happiest place in France.

The FDA has just approved a nonsurgical device for treating obesity that involves putting silicone balloons in a patient’s stomach via an endoscope.

Random reads

Social media is after the dentist who killed Cecil the lion. Add Zimbabwe officials to that list.

Helicopters, celebrity performers are just the highlights at a tech titan’s wedding.

At the other end of the economy, 2,000 migrants try to sneak onto the Eurotunnel.

Texas authorities release more video footage of Sandra Bland.

Ivana Trump says her ex will make a great president.

Tom Brady has taken to Facebook over that NFL deflate-gate game ban.

Meanwhile, wife Gisele dons a burka, but it’s not what you think.

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