Wall Street went through another day of whiplash Monday, with the Dow dropping more than 500 points amid UK turmoil before ending the day up on bullish economic reports.
The early pain came after UK Prime Minister Theresa May announced she was postponing a vote on a plan to leave the European Union.
“This was the last thing that you want to have as an investor. Theresa May’s decision has created more chaos for the UK,” Naeem Aslam, chief market analyst at Think Markets UK, said in a note.
Bank stocks got pummeled early on concerns that an inverted bond-yield curve will slam profits. The arrest of a Chinese tech exec in Canada to face extradition in the US, meanwhile, continued to fan worries about US-China trade tensions.
Nevertheless, stocks recovered after Goldman Sachs and JPMorgan Chase issued economic reports saying markets had fallen too low, and that the Federal Reserve was likely to slow its increases of borrowing costs next year.
“We think the probability of a move in March has now fallen to slightly below 50 percent,” Goldman economist Jan Hatzius wrote in a note, according to Reuters.
The Dow Jones industrial average closed at 24,423.26, up 34.3 points, for its first positive session in four days.
Other market gauges also rallied. The S&P 500, a broader index of US companies, rose 4.6 points, to 2,637.72. The Nasdaq rose the most, up more than 1 percent, to 6,682.74.
Treasury bonds increased on the news, sending yields plummeting. The yields on 2-year Treasury notes rose higher than 5-year notes, a signal that tends to indicate an oncoming recession.
Despite a Chinese judge’s ruling on a lawsuit filed by Qualcomm against Apple that could ban many iPhone sales in the country, Apple rallied as much as 3 percent, to a high of $170.01, and led tech stocks higher into the afternoon. The iPhone maker closed the day at $169.60.
Global markets have reacted sharply to Brexit negotiations. When UK voters first voted to leave the European markets in June 2017, US stock markets plunged 2.2 percent.
May’s government released a 585-page Brexit deal last month that has been widely derided by conservative and liberal UK politicians.
The vote was delayed in part over disagreements over how the UK and the European Union would enforce the border between Ireland and Northern Ireland.
