(Reuters) – The Dow Jones Industrial Average surged more than 1,000 points for the first time yesterday, 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.
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. U.S. 2018 holiday sales rose 5.1 percent from a year ago to over $850 billion, the strongest gain in six years, according to a Mastercard report. The S&P 500 retailing index jumped 7.4 percent, while shares of online retailer Amazon, which touted a “record-breaking” season, climbed 9.4 percent.
Stocks found their footing after wobbling in morning trade. The S&P 500 came within 2 points of being down 20 percent from its late-September closing high, the threshold commonly used to define a bear market.
“The market is extremely oversold where we left it” on Monday, said Brett Ewing, chief market strategist at First Franklin Financial Services. “You cannot make the assumption that this correction is over, but today’s action is definitely a very positive signal.”
The Dow Jones Industrial Average rose 1,086.25 points, or 4.98 percent, to 22,878.45, the S&P 500 gained 116.6 points, or 4.96 percent, to 2,467.7, and the Nasdaq Composite added 361.44 points, or 5.84 percent, to 6,554.36.
The previous record point gain for the Dow was 936.42 on Oct. 13, 2008, during a period when markets were whipsawed almost daily by developments in the financial crisis, which was then in full swing. Over the two sessions following that gain, the Dow dropped more than 800 points.
