STREET racked up its biggest one-day gain in four years yesterday as fears about China’s economy gave way to bargain hunters emboldened by expectations the US Federal Reserve might not raise interest rates next month.
Led by Silicon Valley stalwarts Apple, Amazon and Google, the surge put the brakes on a six-day losing streak that saw the S&P 500 surrender 11 per cent.
The Dow Jones industrial average finished 3.95 per cent higher at 16,285.51, while the S&P 500 gained 3.9 per cent to 1,940.51 and the Nasdaq Composite added 4.24 per cent to end at 4,697.54.
In a sign that a faltering Chinese economy and slumping global financial markets could affect US monetary policy, New York Fed president William Dudley said the prospect of a September rate hike seemed “less compelling” than it was just weeks ago.
Some of the late-day rally was driven by short-term traders, including many who had bet the market would fall and rushed to cut their losses, said Michael Matousek, head trader at US Global Investors.
A strong rally on Tuesday had evaporated in the final minutes of trading and turned negative.
“A lot of people were anticipating the last half of the day would roll over and fall off and that hasn’t happened,” Matousek said.
“You could see the buying accelerating at mid-day and people saying ‘I’m wrong’, and starting to cover their shorts.”