China's central bank

The People's Bank of China lifted its 7-day and 28-day reverse repurchase agreements by 5 basis points.

This essentially represents a modest rise to borrowing costs and is the first rate hike since March.

Beijing is attempting to limit the flow of capital out of the country without harming economic growth.

In addition to short-term borrowing rates, China also increased rates on its one-year medium-term lending facility by 5 basis points.

China described the move as a "normal market reaction" to steps taken by the Federal Reserve.

The Dow Jones industrial average rose 296 points, or 1.9 percent, to 16,180.61, as of 9:45 a.m. Eastern time. The Standard & Poor's 500 index climbed 38 points, or 2 percent, to 1,932. The Nasdaq composite rose 109 points, or 2.4 percent, to 4,635.

Oil prices are up, but U.S. crude is still trading below $40 a barrel.

Treasury notes are falling, pushing up the yield on the 10-year benchmark not to 2.08 percent.

 Major markets in Europe and Asia made gains, while the U.S. stock market finished with a slight loss.

Officials from China's central bank defended recent moves to loosen the government's grip on its currency, saying that the yuan will eventually rebound from its recent fall. There is "no basis for persistent and substantial devaluation," said a deputy central bank governor, Zhang Xiaohui. The yuan is close to "market levels" after two days of sharp drops, Zhang said.