US stocks stage big rally, erase 600 point drop in Dow
By ALEX VEIGA, AP Business Writer
Wall Street staged a swift, last-minute turnaround Thursday that rescued stocks from a steep dive and put the market on track to end a topsy-turvy, volatile week with a gain.
The comeback reversed a 611 point drop in the Dow Jones Industrial Average. The S&P 500 and Nasdaq eked out modest gains after having been down 2.8 and 3.3 percent, respectively.
Thursday’s sharp swing in stocks followed their best day in 10 years. Even so, the market remains headed for what could be its steepest annual loss since the financial crisis.
The market’s sharp downturn that began in October has intensified this month, erasing all of its 2018 gains and nudging the S&P 500 closer to its worst year since 2008. Even with the two-day winning streak, the Dow, S&P 500 and Nasdaq are all down more than 9 percent for the month and stocks are on track for their worst December since 1931.
“There are reasons we should be volatile, including a lot of unknowns as we head into 2019, starting with tariffs,” said JJ Kinahan, chief markets strategist for TD Ameritrade, noting that below-average trading volume this time of year is also contributing to the market’s volatility this week.
Prior to the two-day rally, the S&P 500 had fallen in 11 of 16 trading sessions in December, with five of the declines by 2 percent or more. Investors had grown worried that the testy U.S.-China trade dispute and higher interest rates would slow the economy, hurting corporate profits.
“The last two days are really demonstrable of what the market is struggling with,” said Tom Martin, senior portfolio manager of Globalt Investments. “It’s looking for a bottom. It’s looking for a reason to gain a little more confidence. And it’s also looking for opportunities to reposition and lessen risk.”
Health care and technology companies, banks and industrial stocks accounted for much of the broad gains.
The S&P 500 index rose 21.13 points, or 0.9 percent, to 2,488.83. Earlier, it had been down more than 69 points. The Dow gained 260.37 points, or 1.1 percent, to 23,138.82. Both indexes rose about 5 percent Wednesday, when the Dow had its biggest-ever single-day point gain.
The tech-heavy Nasdaq added 25.14 points, or 0.4 percent, to 6,579.49. The Russell 2000 index of smaller-company stocks picked up 2.01 points, or 0.2 percent, 1,331.82.
Technology companies, a big driver of the market’s gains before things deteriorated in October, rebounded after being down most of the day. Micron Technology gained 3.4 percent to $31.93. It had fallen to $30.59 before the rally.
Cigna rose 2.8 percent to $192.79, one of the big gainers in the health care sector.
Bonds prices rose. The yield on the 10-year Treasury slipped to 2.78 percent from 2.79 percent late Wednesday, although the yield dropped as low as 2.73 percent when stocks were near their lowest levels as investors sought safer investments. The recovery in bond yields helped lift financial stocks. JPMorgan Chase rose 1.1 percent to $97.04.
Benchmark U.S. crude dropped 3.5 percent to settle at $44.61 a barrel in New York. Brent crude, used to price international oils, lost 4.2 percent to $52.16 a barrel in London.
The dollar fell to 110.74 yen from 111.36 yen on Wednesday. The euro strengthened to $1.1449 from $1.1351.
Gold edged up 0.6 percent to $1,281.10 an ounce and silver gained 1.2 percent to $15.31 an ounce. Copper fell 1.2 percent to $2.67 a pound.
Overseas, major indexes in Europe closed lower while markets in Asia mostly rose. The German DAX slid 2.4 percent, while the Nikkei 225 index rebounded 3.9 percent.