Dow drops 400 points following its worst week in a decade

Wall Street notches best day in 10 years in holiday rebound

The Russell 2000 index of smaller-company stocks picked up 11 points, or 0.9 percent, 1,278.

Analysts noted that although Wednesday's run-up was exciting to watch, they needed more evidence of a sustainable rally given that major indices suffered their worst-ever Christmas Eve performance just three days ago. The tech-heavy Nasdaq lost 127 points, or 1.9 percent, to 6,427.

The S&P 500 - which had been on the verge of bear market territory, which is when a market falls 20% from a recent high - and Nasdaq were also up sharply.

That overshadowed positive noises from the US government on trade talks with Beijing, its efforts to temper the White House's recent broadsides against the Federal Reserve and a Mastercard Inc report that USA holiday shopping sales had risen the most in six years in 2018. Some traders have suggested that the market has gotten to the point where a short-term bounce could occur, if only for technical reasons.

Asian markets closed mixed: Tokyo's Nikkei added 0.9 per cent, Hong Kong's Hang Seng 0.4 per cent lower, and China's Shanghai Composite 0.3 per cent lower. Indeed, holiday sales increased 5.1 percent on the 2017 season to over $850 billion (€747 billion). Multiple reports said President Donald Trump is discussing how to remove Jerome Powell from his position as chairman of the Federal Reserve. The stocks saw their worst December and worst Christmas on record.

Heading into the day's session, the S&P 500 was on the verge of entering a bear market, defined as a 20 per cent drop from its peak value.

Investors started the day selling off stocks after Treasury Secretary Steven Mnuchin shared a statement Sunday, saying he held individual calls with the CEOs of the nation's six largest banks who assured him they had "ample liquidity" to lend to consumers and businesses.

"Thanks to the sharp rebound in United States shares, it is increasingly possible that Japanese stocks will end the year on a bullish note", said Yoshihiro Ito, chief strategist of Okasan Online Securities, using a finance term to describe when prices are rising. However, the Fed failed to signal that it was easing off its tighter policy approach as much as markets had expected. Noble Energy slid 4.1 percent to $18.31.

Political turmoil this week has added to concerns about a cocktail of factors - including slowing growth, trade tensions, and more expensive refinancing after years of stimulus - that have weighed on global markets in recent months. Brent crude, used to price global oils, gained 7.9 per cent to $54.47 a barrel in London.

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 US and Chinese tariff hikes were paused.

Investors also bought yen, pushing the dollar 0.4 per cent lower versus the Japanese currency and forcing it to cede some of its 1-per-cent overnight rise. Amazon (AMZN), Facebook (FB), Alphabet (GOOGL), Netflix (NFLX) and Apple (AAPL) all fell about 2%. The euro rose to $1.1397 from $1.1353.

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