The Dow Jones industrial average soared more than 600 points Wednesday, snapping a six-day losing streak and notching its third-largest daily point gain.
The Dow, the Standard & Poor’s 500-stock index and the Nasdaq all climbed close to 4 percent. For the Dow and the S&P 500, it was the strongest percentage gain since November 2011.
Despite growing worries about the slowdown in China, investors were calmed — at least temporarily — by positive economic reports in the United States, news that China increased market stimulus and predictions that the market turmoil may prompt the Federal Reserve to extend its easy-money policy.
It was a shift from Tuesday, when U.S. stocks seemed poised for a gain throughout the day before tanking in the final minutes of trading. On Wednesday, the rally accelerated in the afternoon, making for a dramatic closing.
On Thursday, Chinese markets opened up, with the Shanghai Composite initially rising 2.9 percent in early trading, tracking early gains across Asia following Wall Street’s Wednesday rebound.
Worries about China have rocked global stock markets, including Asian and European stocks, over the past several days. Some investors say the wide market swings seen this week — even within the trading day — may become the norm until the economy stabilizes in China and investors get more certainty about when the Fed will act.
“There will be aftershocks,” said Russ Koesterich, global chief investment strategist for BlackRock. “We’re probably done with this period of very low volatility.”
For the moment, U.S. investors were buoyed by stronger economic reports that served as a reminder that the country may be able to withstand any slowdown in China. Orders of durable goods increased 2 percent in July, the Commerce Department announced Wednesday. The report followed news Tuesday that consumer confidence and home sales also picked up in July.
“People need to see that the U.S. economy is still okay and that China is not going to fall apart,” said Keith Lerner, chief market strategist for SunTrust.
Investors may also be celebrating a potential consequence of the volatility: the possibility that the Fed may delay raising interest rates. A broad slowdown overseas and a sustained decline in stock markets could increase the risks to the U.S. expansion.
That has lowered the likelihood that the Fed will withdraw its support for the nation’s recovery when it meets in September. Just a few weeks ago, investors had widely expected the central bank to raise its benchmark interest rate for the first time in nearly a decade at the meeting. But traders have now slashed those odds, and a growing chorus of prominent economists predicts the Fed will wait.
New York Fed President William Dudley seemed to confirm that sentiment Wednesday morning. In public remarks, he said that international developments “do have relevance” for the U.S. outlook. He added that a rate hike in September is “less compelling” but left open the possibility of a last-minute move at the central bank’s December meeting.
“I really hope we can raise interest rates this year,” Dudley said.
On Wednesday, all 10 sectors of the S&P 500 rose throughout the day as investors piled on more risk. The final surge resulted in a 619-point gain for the Dow, an increase of 4 percent. The S&P 500 was up nearly 73 points, or 3.9 percent. And the Nasdaq gained 191 points, or 4.2 percent. Tech stocks led the rally with a 5.3 percent gain. More conservative sectors, such as utilities, lagged with smaller gains.
After days of whipsawing performance, market strategists were watching for signs of stability.
“What we’re looking for is to make sure this is the beginning of more than a bounce, the beginning of a repair in the market,” said Quincy Krosby, market strategist for Prudential Financial.
Chinese authorities, meanwhile, have moved to assure investors that despite the ongoing volatility and their failed efforts to stop it, the economy is sound.
“Currently, global economic trends are opaque and confusing, and market volatility is quite large, and this has had some impact on the Chinese economy,” Premier Li Keqiang said at a meeting Tuesday, according to Chinese media reports. “But fundamentally, the overall stability of the Chinese economy has not changed, and positive factors sustaining a turn for the better in the real economy are accumulating.”
Rauhala reported from Beijing. Ylan Q. Mui in Washington contributed to this report.