US Stocks Stage Furious Late-Day Rally, Erase Big Drop in Dow

US stocks attempt rebound

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 US and Chinese tariff hikes were paused.

US stocks soared on Wednesday, with the Dow surging more than 1,000 points, as investors tried to regain some of the steep losses suffered in the previous trading sessions. The Russell 2000 index of smaller-company stocks gave up 25 points, or 1.9 percent, 1,304.

Gains for the sector seem to have been helped on news that holiday sales increased 5.1 percent year over year to more than $850 billion this year. The Bureau of Economic Analysis said on Wednesday that it's required to suspend all operations until Congress approves funding, which means that the government might not release its fourth-quarter report on gross domestic product as scheduled for January 30. Adobe rose 8.7 percent to $222.95. The Toronto Stock Exchange was closed on Wednesday along with markets in Europe, Hong Kong and Australia.

Bond prices fell. The yield on the 10-year Treasury is up to 2.76 percent.

The call did more to rattle markets than to assure them and all three major USA stock indexes ended down more than 2 percent on the day. Energy companies fell along with the price of oil. The stocks saw their worst December and worst Christmas on record. At its session low, the S&P hit a fresh 20-month low and came within two points of entering bear market territory, measured by a drop of more than 20 percent from a closing high.

Despite recent market swings, there is a good chance that stocks will continue to rise going into 2019. Trump has taken aim multiple times this year at the US central bank's monetary policy and its chairman, Jerome Powell, going as far as to say that the Fed has " gone insane". At the same time, he repeated on Tuesday his sharp criticism of the American Central Bank. In his latest tweet, Trump likened the Fed to "a powerful golfer who can't score". "The only problem our economy has is the Fed", he said on Twitter on Monday.

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Technology companies, a big driver of the market's gains before things deteriorated in October, rebounded after being down most of the day.

"Having said that", Hooper said, "the Fed should be more flexible regarding balance sheet normalization, given how powerful a tool it is". "But this base case of "the world is coming to an end" just given the fundamental data out there doesn't make any sense". That ratio is below both the 5-year average of 16.4 and the 10-year average of 14.6.

Benchmark U.S. crude, meanwhile, climbed 8.7 per cent to US$46.22 a barrel in NY.

Political turmoil this week has added to concerns about a cocktail of factors - including slowing growth, trade tensions, and more expensive refinancing after years of stimulus - that have weighed on global markets in recent months. The federal government partially shut down on December 21 after Congress failed to pass spending legislation.

"We expect the effect on real GDP would amount to -0.07 percentage points per week of shutdown", the report said.