Volatility continued to reign Thursday, with stocks erasing heavy losses to end higher in a late-session turnaround that saw the Dow Jones Industrial Average end more than 800 points above its session low.
The rebound came after stocks initially struggled to build on the previous session’s sharp rally, which in turn was a snapback from the worst Christmas Eve performance in history.
How did benchmarks perform?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.59% rose 260.37 points, or 1.1%, to end at 23,138.82, after dropping as much as 611 points at its session low. The S&P 500 /zigman2/quotes/210599714/realtime SPX +0.56% also erased a sharp decline to rise 21.13 points, or 0.9%, finishing at 2,488.83. The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.93% erased a loss of more than 3% to close at 6,579.49, a gain of 25.14 points, or 0.4%.
On a percentage basis, the Dow’s move from a 2.67% decline at its session low to a positive finish marked its biggest such intraday swing since Oct. 4, 2011, when it recovered from a fall of 2.75% at its low, according to Dow Jones Market Data. The Thursday turnabout was the largest such swing for the S&P 500 since May 25, 2010, and the largest for the Nasdaq since Nov. 18, 2008.
On Wednesday, the Dow ended with a gain of 1,086.25 points, or 5%, at 22,878.45. The S&P 500 soared 5% to end at 2,467.70 and the Nasdaq rose 5.8% to 6,554.36.
The Dow’s Wednesday rebound marked its largest-ever one-day point rise. On the more relevant percentage basis, all three major indexes logged the strongest one-day gains since March 23, 2009, and it was the best-ever day-after-Christmas performance for the equity gauges. It comes on the heels of a brutal selloff in a shortened Christmas Eve session Monday, which featured the lowest closes for all three indexes since 2017.
What’s driving the market?
Light holiday trading volume and computer-driven trading have been blamed for extremely choppy December price action, which has seen a number of sharp daily moves and a rise in volatility. Stocks remain down sharply for the month and lower for the year, with the Nasdaq Composite in a bear market and the S&P 500 and Dow solidly in correction territory.
There has been little in the way of fresh fundamental catalysts. The rebound was broad-based, with the materials sector leading gains with a 1.8% rise, while the health-care, energy, consumer staples and industrials sectors rising more than 1%.
While investors got an assurance over Federal Reserve Chairman Jerome Powell’s job on Wednesday, there remains no resolution to other big issues, such a continuing government shutdown as Washington tussles over funding for President Donald Trump’s proposed border wall.
There was upbeat news for global trade, with the U.S. expected to send a delegation to hold talks with Chinese officials during the week of Jan. 7, according to Bloomberg News. It would mark the first meeting since the G-20 summit in Argentina earlier this month, which yielded a 90-day tariff truce.