Coverage: Stock market has huge one-day jump

The Dow Jones Industrial Average surged more than 1,000 points for the first time on Wednesday, leading a broad Wall Street rebound after a report that holiday sales were the strongest in years helped mollify concerns about the health of the economy.

Lewis Krauskopf of Reuters had the story:

Following Wall Street’s worst-ever Christmas Eve drop in the previous session, the advance was also fueled by investors’ reversing bets against a wide range of stocks. By the close, the Dow, S&P 500 and Nasdaq had notched their largest daily percentage gains in nearly a decade.

In a dramatic session that also saw the benchmark S&P 500 come within a whisker of dropping into bear market territory, oil prices surged, boosting sentiment for risk assets such as stocks and underpinning a 6.2 percent gain for energy shares.

Concerns about the economic growth outlook, the U.S.-China trade dispute and rising interest rates have dogged stocks since the end of summer, and the major indexes are still down more than 10 percent this month alone, with three more trading days left in the year.

Traders and investors said technical market factors also contributed to the rally. By some technical measures, the S&P was its most oversold in years following Monday’s sell off.

Jeremy Herron and Vildana Hajric of Bloomberg News reported that it was the biggest rally since March 2009:

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.”

Alex Veiga of the Associated Press reported that it will still be the worst December since 1931:

But even with the rally, the market remains on track for its worst December since 1931, during the depths of the Depression, and could finish 2018 with its steepest losses in a decade.

“The real question is: Do we have follow-through for the rest of this week?” said Sam Stovall, chief investment strategist for CFRA.

Technology companies, health care stocks and banks drove much of the broad rally. Retailers also were big gainers, after a holiday shopping season marked by robust spending. Amazon had its biggest gain in more than a year.

Energy stocks also rebounded as the price of U.S. crude oil posted its biggest one-day increase in more than two years.

But what really might have pushed stocks over the top was a signal from Washington that President Donald Trump would not try to oust the chairman of the Federal Reserve.