Dow surges 1,086 points in furious trading

Jeremy Herron and Vildana Hajric
Bloomberg News

U.S. stocks staged a furious rally a day after dropping to the brink of a bear market, with major indexes surging the most since August 2015.

The S&P 500 and Dow Jones Industrial Average closed Wednesday up 5 percent, with the Dow gaining 1,086 points. The Nasdaq rallied 5.8 percent. Consumer shares headed for the best day since March 2009. Amazon led the gain, with a 9.4 percent surge sparked by record holiday sales.

President Donald Trump said a day earlier that the rout that took stocks down 19.8 percent from a record provided a “tremendous opportunity to buy.” Investors also welcomed Kevin Hassett’s assurance that Jerome Powell’s job is “100 percent” safe. Oil’s best rally since 2016 added to the equity surge.

“It was probably a pretty good retail-oriented holiday and that probably has a lot to do with what’s happening today,” said Kim Forrest, a senior portfolio manager at Fort Pitt Capital Group. “The thing that the Fed chairman won’t be axed, that has a lot to do with everyone being happy Powell gets to keep his job and that the turmoil about this has abated for today. You have the market leaning one way or the other, and it can often do what it’s doing today, which is go higher. On Monday the market leaned lower. It’s an outsize move.”

Stocks are looking to stop one of the most miserable Decembers on record, as a host of headwinds combined to drag down America’s benchmark index. A reminder that consumers – a key part of the American economy – remain on solid footing helped soothe anxiety created by fears of a global slowdown and personnel churn in the U.S. administration. Volume was in-line with the 30 day average at this time of day.

Hassett was the latest government official to try to calm the markets after Bloomberg’s report Friday that President Donald Trump asked about firing Powell. Steven Mnuchin was criticized for saying he called bank chiefs to gauge liquidity. Trump expressed confidence in Mnuchin yesterday.

Crude surged, the greenback was slightly stronger versus its major peers and Treasuries slipped. Exchanges throughout Europe remained closed for the holiday.

Elsewhere on Wednesday, Japanese equities closed higher on a wave of late buying after fluctuating throughout the day. Korean shares tumbled after a holiday, and Shanghai stocks fell for a second day. Markets in Australia and Hong Kong were closed.

West Texas Intermediate crude rebounded to trade above $44 a barrel. The offshore yuan was little changed after China released new rules promising to treat all companies equally, the latest positive step on the trade and investment front since further U.S. and Chinese tariff hikes were paused.

“There’s a lot of uncertainty in the short-term and that makes sense,” Gershon Distenfeld, AllianceBernstein co-head of fixed income, said on Bloomberg TV. “We’re going to have a lot of volatility. But this base case of ‘the world is coming to an end’ just given the fundamental data out there doesn’t make any sense.”