Fred Imbert,Eustance Huang
The Dow Jones Industrial Average traded 621 points higher as of 1:55 p.m. ET, while the S&P 500 gained 2.9 percent. The Nasdaq Composite outperformed, rising 3.7 percent. Both the S&P 500 and Nasdaq were on track for their biggest one-day gains since Aug. 26, 2015 and erased Monday’s losses.
Retailers were among the best performers on Wednesday, with the SPDR S&P Retail ETF (XRT) jumping 4.1 percent. Shares of Wayfair, Kohl’s and Dollar General all rose at more than 5 percent. Data released by Mastercard SpendingPulse showed retailers were having their best holiday season in six years. Amazon’s stock also jumped 7.1 percent after the company said it sold a record number of items this holiday season.
Energy stocks also jumped as U.S. crude oil prices jumped more than 7 percent. Shares of Marathon Oil and Hess were the best performers within the energy sector, jumping 7.6 percent and 6.9 percent, respectively.
“With the end of the quarter, we could get a bounce in the next few days,” said Peter Cardillo, chief market economist at Spartan Capital Securities. But “the problem is [President Donald] Trump continues to create a lot of uncertainty. We can’t focus on the fact there are a lot of good bargains out there.”
Wednesday’s moves come after the worst Christmas Eve sell-off ever on Monday, which sent the S&P 500 into a bear market. The S&P 500 was down 20.06 percent from an intraday record high set on Sept. 21 before Wednesday’s sharp rebound. U.S. exchanges were closed Tuesday for the Christmas holiday.
The plunge in stocks on Monday came after Treasury Secretary Steven Mnuchin held calls with CEOs of major U.S. banks last weekend and issued a statement saying, “The banks all confirmed ample liquidity is available for lending to consumer and business markets.”
The recent decline in stocks “is a buyer’s strike due to lack of confidence in policymakers around the world,” said John Augustine, chief investment officer at Huntington Private Bank. “It’s going to take a long time to recover that confidence.”
Monday’s move lower also came after President Donald Trump commented on the Federal Reserve once more, calling it “the only problem our economy has” in a tweet. Trump also said Tuesday the Fed was “raising interest rates too fast because they think the economy is so good. ” Trump has been critical of the Fed’s decisions regarding monetary policy this year. The central bank has hiked overnight rates four times this year.
This is all taking place amid an ongoing government shutdown that started last week. The Trump administration and congressional leaders are at a stalemate over funding for a wall along the U.S.-Mexico border. The administration says the wall is important for national security while opponents of the barrier note it will not solve the U.S.′ immigration issues.
“Government shutdown starts with no end game strategy by either side,” L. Thomas Block, Washington policy strategist at Fundstrat Global Advisors, said in a note to clients. “The President ... remains convinced that fighting for HIS wall is worth a government shutdown and his base loves the confrontation.”
—CNBC’s John Melloy and Michael Sheetz contributed to this report.