Stocks stage massive swing

October 05 00:48 2015

Stocks on Wall Street have staged a powerful comeback after plunging at the open Friday as investors reacted to a weaker-than-expected September jobs report. The news, which raised fresh fears about a slowdown in the U.S. economy amid a global slump and fresh questions about U.S. interest rate policy, initially sent the Dow down 258 points, or 1.5%. But at the close, the Dow was up 1.2%, a 200-point gain for the day the day and a 458-point reversal from the low that CNBC said was the biggest such swing in four years.AP FINANCIAL MARKETS WALL STREET F USA NY

The Standard & Poor’s 500 index did even better for the day, closing up 1.4%, but Nasdaq composite index was the standout with its 1.7% gain. Both of the other benchmarks started the day deep in the red, as well. Investors appear to be shrugging off the weak jobs report, instead focusing on the positives, such as the positive impact of a weakening dollar today on business and earnings of U.S. multinationals. Wall Street may also be reacting to what it perceives as lower odds of an interest rate hike from the Federal Reserve this year.

Today’s weak start and rebound rally marks the second straight day U.S. stocks have bounced back from steep drops, another factor that could be giving investors some confidence that the market is not ready to break sharply lower right now, despite its recent drop into correction territory for the first time in four years. A correction is defined as a drop of 10% from a previous high. The economy created just 142,000 jobs in September, well below the 200,000 jobs economists had forecast. The unemployment rate held steady at 5.1%. Adding to the negative tone, the government also revised lower August jobs to 136,000 from 173,000 and July to 223,000 from 245,000.

The weak September jobs report and downward revisions to the prior two months raised fresh fears about the health of the U.S. economy, which appears to have weakened amid a slowing global economy and recent market turbulence. The weak jobs data also could push off the Federal Reserve’s first rate hike to next year, according to Fed funds rate futures trading and initial reactions from Wall Street pros after the jobs data was released.