Nasdaq up 2%, Dow gains 228 as stocks rally
After an early, rough start Thursday, stocks finally shot higher with the Dow jumping more than 300 points before moderating its gains after Wednesday's brutal sell-off that sent the broad U.S. stock market down more than 10% from their highs.
After bouncing in and out of positive territory about mid-morning Eastern Time, the Dow Jones industrial average surged, then eased back to finish up 228, or 1.4%. It was the blue chips' biggest point gain since Dec. 4.
The S&P 500 gained 1.7% and the Nasdaq composite index sprang up 2%.
Heading into Thursday's trading session the broad Standard & Poor's 500 stock index was down 11.3% from its May 2015 peak and at 1890.28 is was getting very close to its recent low of 1867.61 back on Aug. 25. Wall Street analysts are viewing the August lows as a key level of support for the market. If that level doesn't hold, it suggests more downside as investors raise more cash to reduce risk.
Before the opening bell, Wall Street got a better-than-expected earnings report from JPMorgan Chase (JPM). The big bank topped both profit and revenue expectations.
JPMorgan profits rise; CEO warns of "stress" in energy
Stocks have been going through a process of being re-priced at lower levels due to the same headwinds and fears that have haunted stocks all year: a rout in commodity markets and concerns that the global economy is on the cusp of a severe slowdown as growth in China — the world's second-biggest economy — slows.
The market, which has been severely damaged by the sell-off to start 2016, is ripe for a bounce, many strategists say. The stock market is currently oversold, with just 12% of the stocks in the S&P 500 index above their average price level over the past 50 days, a market metric that shows the short-term trend of the market has turned down.
However, any bounce the market can muster up will be analyzed carefully for signs of staying power, Chris Verrone, an analyst at Strategas Research Partners, told clients in a note before Thursday's opening bell.
"The burden of proof remains squarely on the bulls," Verrone wrote.
Wall Street was also closely watching oil prices again, which were trading in the black Thursday. A barrel of U.S.-produced crude was up $1.06, or 3.5%, to $31.53. A drop below $30 a barrel earlier this week spooked investors, prompting many Wall Street firms to lower their price projections for crude. A 2% rise in stocks in mainland China's Shanghai composite index also helped boost sentiment.
Wall Street is gearing up for an onslaught of fourth-quarter 2015 earnings reports in coming weeks. And even though analysts are expecting a second-straight quarter of contracting earnings growth, there is hope that the earning season will ease fears about the U.S. economy amid the current global growth fears. Chip maker Intel reports after today's closing bell and major banks Wells Fargo and Citigroup report profit results Friday.
"Earnings season is here, and it will be interesting to watch the (stock) reactions given the brutal price action over the last few months," Bespoke Investment Group told clients in a research report before the open of trading Thursday.
Stocks in Europe are down sharply on Thursday, but were off their lows of the day, following the big losses on Wall Street Wednesday. The broad Stoxx Europe 600 index was 1.6% lower, while the German DAX was 1.7% lower and the CAC 40 in France was down 1.8%.