Dow finishes up 1.1% as US stocks rebound, with jitters over growth giving way to bargain-hunting

Traders work on the floor of the New York Stock Exchange, Dec 26, 2018.
Traders work on the floor of the New York Stock Exchange, Dec 26, 2018.PHOTO: REUTERS

NEW YORK (AFP) - Wall Street stocks finished solidly higher on Thursday (Dec 27) following a late-afternoon surge as worries over slowing economic growth gave way to bargain-hunting.

The Dow Jones Industrial Average finished with an increase of 1.1 per cent at 23,138.82, an 870-point recovery from the low point of the session.

The broad-based S&P 500 climbed 0.9 per cent to end the day at 2,488.83, while the tech-rich Nasdaq Composite Index advanced 0.4 per cent to close at 6,579.49.

The push into positive territory came in the final 30 minutes of the session. The market had look poised to erase all the prior day's gains, but investors poured in to take advantage of low prices.

And while trading is usually light during Christmas week, data has suggested volumes more in line with non-holiday sessions.

"You're seeing the trend, which is volatility," analyst Patrick O'Hare said on Thursday morning while stocks were still deep in negative territory.

The market opened lower, and losses accelerated after data showed a drop in consumer confidence - largely driven by the equities losses in recent weeks - before staging a comeback.

But Mr Peter Cardillo of Spartan Capital Securities said the late-session rally is "a good sign that going into the next year, we'll probably make a bottom and we might start to stabilise".

Wall Street stocks have been under pressure for much of December due to worries over a weakening economy, higher Federal Reserve interest rates, the ongoing United States-China trade war, political turmoil involving President Donald Trump and a US government shutdown.

Those dynamics led to four straight routs on Wall Street that started on Dec 19 and ended decisively with Wednesday's session that saw the Dow surge by nearly 1,100 points.

Some analysts said the pullback in US stocks was overdone, given solid employment and US growth data.

But others expressed concern over expectations for slower US growth next year, with some forecasting a recession in 2020.

Market volatility has also been blamed on Mr Trump's erratic governing style, which has led to massive turnover in his administration, as well as his repeated attacks on the central bank, fuelling worries that Mr Trump could dismiss Federal Reserve chairman Jerome Powell.