U.S. Stocks Surge in Best Rally Since 2009

U.S. stocks staged one of the biggest rallies of the 9-1/2 year bull market after coming within points of seeing it end, with major indexes surging at least 4.9%. Crude jumped almost 10%.

All but one member of the S&P 500 advanced, the Dow Jones Industrial Average jumped more than 1,050 points and the Nasdaq 100 rallied 6%. Each gain was the best since 2009, the year the longest bull market on record began. Consumer shares paced the rally, with Amazon jumped 9.5% after reporting record holiday sales. Each member of the FAANG cohort rallied at least 6.4%, while energy producers surged as crude powered past $46 a barrel.

President Donald Trump said a day earlier that the rout that took stocks down 19.8% 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."

Stocks are looking to stop one of the most miserable Decembers on record, as a host of headwinds combined to drag down America's benchmark index. A reminder that consumers — a key part of the American economy — remain on solid footing helped soothe anxiety created by fears of a global slowdown and personnel churn in the U.S. administration. A late report that a U.S. government delegation will travel to Beijing in two weeks to hold trade talks gave stocks a final push higher.

Hassett was the latest government official to try to calm the markets after Bloomberg's report Friday that President Donald Trump asked about firing Powell. Steven Mnuchin was criticized for saying he called bank chiefs to gauge liquidity. Trump expressed confidence in Mnuchin yesterday.

Other Markets

Crude surged, the greenback was stronger versus its major peers and Treasuries fell. Exchanges throughout Europe remained closed for the holiday.

Elsewhere on Wednesday, Japanese equities closed higher on a wave of late buying after fluctuating throughout the day. Korean shares tumbled after a holiday, and Shanghai stocks fell for a second day. Markets in Australia and Hong Kong were closed.

West Texas Intermediate crude rebounded to trade above $44 a barrel. 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 U.S. and Chinese tariff hikes were paused.

"There's a lot of uncertainty in the short-term and that makes sense," Gershon Distenfeld, AllianceBernstein co-head of fixed income, said on Bloomberg TV. "We're going to have a lot of volatility. But this base case of 'the world is coming to an end' just given the fundamental data out there doesn't make any sense."

Here are some events investors may focus on in coming days:

U.S. new-home sales are due Thursday.
Baker Hughes releases its weekly data on active U.S. oil rigs on Friday.
Monday is year end.
Brazil's new president is sworn in on Tuesday.

Main moves in markets:

Stocks

The S&P 500 Index rose 4.96% as of 4 p.m. in New York, after falling within two points of a bear market earlier in the session. The Nasdaq 100 surged 6.2% and the Dow Jones Industrial Average rallied 1,086 points. The MSCI Asia Pacific Index gained 0.2%, the first advance in a week and the biggest rise in more than a week. The MSCI Emerging Market Index fell 0.2%. Topix index increased 1.1%, the first advance in more than a week and the biggest climb in two weeks.

Currencies

The Bloomberg Dollar Spot Index climbed 0.3%. The euro fell 0.3% to $1.1353. The British pound fell 0.3% to $1.2637. The Japanese yen weakened 0.9% to 111.284 per dollar, the first retreat in almost two weeks.

Bonds

The yield on 10-year Treasuries gained five basis points to 2.79%. The two-year rate added five basis points to 2.60%.

Commodities

West Texas Intermediate crude was up 9.5% at $46.59 a barrel. Gold fell 0.2%t to $1,268.80 an ounce.