Stocks surge on Wall Street, rally back from Christmas Eve beating
Markets staged a miraculous comeback Wednesday following stocks’ worst-ever Christmas Eve. The Dow posted biggest daily point gain ever.
The Dow rose 1,086 points, gaining 5%. The S&P 500 soared 5%, and the Nasdaq was up about 5.2%, pulling out bear market territory.
The day marked the biggest percentage gain for all three indices since March 2009.
Wednesday was a respite from a very rough month for investors.
“Investors went bargain shopping the day after Christmas, where stocks just got too cheap relative to earnings, future earnings, any reasonable assessment of earnings,” said Chris Rupkey, managing director of MUFG. “The coast is clear, back up the truck, investors are saying enough already, the world is not ending.”
Thin trading and a lack of big news often send stocks higher in the last week of December.
Stocks rose higher despite virtually no news — which may have been a catalyst in its own right. President Donald Trump has not tweeted Wednesday. Shortly after 2 pm ET, the White House announced Trump and the first lady traveled to Iraq on Wednesday. Recently, Trump has unsettled markets by signaling the potential firing of Federal Reserve Chairman Jerome Powell and a trade war escalation.
One piece of good news: Mastercard (MA) and Amazon (AMZN) both reported robust holiday season sales, suggesting rising wages and lower gas prices are helping boost consumer spending — the biggest contributor in America’s GDP.
But investors weighed that against a dour housing report from S&P/Case-Shiller, which showed the growth in home prices was at a two-year low. Shares of department store JCPenney (JCP) dipped below $1 for the first time and Ford (F) stock hit a nine-year low.
One good day isn’t a trend
Even after Wednesday’s rally, the S&P 500 remains close to entering a bear market, which would ending the longest bull market in history.
A partial government shutdown, Treasury Secretary Steven Mnuchin’s questions about banks’ health and signals that President Donald Trump could fire Federal Reserve Chairman Jerome Powell upset markets on Monday, sending the Dow down 653 points.
After markets tanked on Christmas Eve, Trump said Tuesday that he remains confident in Mnuchin, but he renewed his criticism of the Fed, accusing it of hiking rates too fast.
Those doubts come of top of worries about how sharply the US economy might lose steam next year.
The only certain thing about the market this month is uncertainty. The slightest bit of bad news can turn a rally into a rout. For example, stocks were up nearly 400 points on Friday but ended the day down more than 400 points.