US stocks drifted higher early on Thursday after a turbulent previous day on Wall Street that saw the S&P 500 end higher after tumbling 1.6 per cent.

Oil prices, which have been a key driver of US stocks, were narrowly lower: West Texas Intermediate, the US marker, fell 0.6 per cent to $31.97 a barrel. Meanwhile, Brent crude slipped 0.4 per cent to $34.41 a barrel.

The relative calm came despite a 6.4 per cent tumble in China’s benchmark mainland stock market index, a sign that worries about Asia’s biggest economy may have less of a grip over global markets than it had earlier this year.

Meanwhile, analysts took a constructive tone on the state of the US economy despite data released on Wednesday that pointed to weakness in the important services sector.

“As long as the labor market remains strong and credit spreads continue to narrow, short term weakness in economic data should not derail the cyclical stock recovery,” Dennis DeBusschere, head of portfolio strategy at Evercore ISI wrote in a note to clients.

“For now, labor market indicators remain positive, which should help reduce concerns of an imminent recession.”

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