Stock market bounces back from historic plummet

A day of wild fluctuation ends with major indexes posting gains

Traders work on the floor of the New York Stock Exchange (AP Photo/Richard Drew)

American stock indexes closed higher after gyrating between steep drops and swift rises, rebounding from heavy losses the day earlier.

At the day’s close, the Dow Jones industrial average had gained 567 points, restoring some of the value lost during a record drop in points a day earlier. The Standard & Poor's 500 was up 46 points while the Nasdaq rose by 148 points.

Those increases followed days of sharp decreases as a long period of market stability and rising stock prices came to an end. Investors were closely scrutinising the day’s market activity to try and determine whether they were seeing short-term fluctuations or a sustained market correction.

Indexes in Asia and Europe declined in response to the prior day’s drop in American markets, previewing another tumultuous day on Wall Street. The Dow both climbed and fell by more than 500 points at various points during the day.

The day before the Dow set a new record for a single-day points drop, tumbling by 1,175 points. Its 4.6 per cent decline in value was the largest since 2011, though it still fell well short of the plummet seen during the 2008 financial crisis.

That diminished value, and a 4.6 per cent decline in the S&P 500 — the index was down about 7.8 per cent from a registered high set in January — were enough to wipe out gains made since the start of the year.

Donald Trump has consistently touted surging stock market values as an affirmation that his pro-business policies are working. With the markets suddenly plunging into uncertainty, his surrogates this week underscored longer-term measures like the unemployment rate.

Speaking before Congress, Treasury Secretary Steve Mnuchin said he was “not overly concerned” about market volatility because “the fundamentals are quite strong”.

“I think you’ve seen a normal market correction, although large,” Mr Mnuchin told legislators, though he acknowledged being preoccupied by the turbulence.

“I normally wouldn’t be looking at my iPhone, but given the market moves, I am checking it,” he said.