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US equities bounce back after turbulent day

US equities bounce back after turbulent day

Wall Street has seen a rebound in the final hour of trading as equities surged back after dropping earlier in the day. 

The S&P 500 index added 0.86 per cent, while the Nasdaq closed up 0.38 per cent and the Dow Jones 1.14 per cent.

In what was another turbulent day of trading the S&P 500 had fallen by close to 2.8 per cent earlier in the day while tech-heavy Nasdaq was down more than 3 per cent.

Speaking to FTAdviser's sister publication the Financial Times, Matthew Bartolini, head of Americas research for State Street SPDR exchange traded funds, said: "Volatile patterns are to be expected with so many macro risks in the air. Investors may be looking at the improved valuations and trying to buy the dip.

"Overall, however, until we get a clear resolution on the plethora of macro uncertainties I’d expect volatile oscillations between gains and losses to continue."

US stocks had fallen sharply in the run up to Christmas in what was one of their worst weeks of trading in a decade, with the S&P 500 losing some 9 per cent over seven days.

But the markets rallied on Wednesday with the Dow Jones up 4.98 per cent and the S&P 500 up 4.96 per cent.

On Monday the US Treasury Secretary sought to reassure investors amidst the downward trend, claiming he had spoken to the chief executives of six of the USA's largest banks who had confirmed they had "ample liquidity" to continue their operations.

Steven Mnuchin had said: "We continue to see strong economy growth in the US economy with robust activity from consumers and business."

Last week the Federal Reserve had increased interest rates again - to a range between 2.25 per cent and 2.5 per cent - despite pressure from US President Donald Trump who described rate raises as "crazy".

Meanwhile, the US government is in partial shutdown over spending plans, which is expected to drag into the new year.

The FTSE 100 was up 0.74 per cent this morning and European stocks experienced similar positive performance.

Asian markets had a mixed reaction on Friday morning with the Hang Seng and Nikkei 225 both down 0.02 per cent and 0.31 per cent respectively.

carmen.reichman@ft.com