US STOCKS GO NUTS: Here's what you need to know

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The rally stuck.

After markets surged early on Wednesday, the market started to give up its gains and a replay of Tuesday’s action — when the Dow gained more than 400 points but closed down 200 — seemed in the cards.

But in the final hour of trading stocks rocketed higher, finishing near their highest levels of the day.

On a points basis, this was third-largest daily gain for the Dow ever, while the S&P 500 had its best day since November 2011.

First, the scoreboard:

  • Dow: 16,285.5, +619, (+3.95%)
  • S&P 500: 1,940.5, +72.9, (+3.9%)
  • Nasdaq: 4,697.5, +191, (+4.2%)

And now the top stories on Wednesday:

  1. The rally stayed intact. After a disappointing final hour of the day on Tuesday that saw the markets give up all of the day’s gains and then some, stocks rocketed higher in the final hour of trading on Wednesday, returning very nearly to where markets closed last Friday. At current levels, the S&P 500 is now down less than 10% from its all-time highs, but each of the major indexes are still down for the year.
  2. The newsflow wasn’t as fast and furious on Wednesday as it had been earlier this week, but the biggest headline came from New York Fed president Bill Dudley, who said in a briefing on the New York-area economy that raising rates currently looks “less compelling.” But as The New York Times’ Binyamin Appelbaum noted, the full context of Dudley’s comments don’t look quite so pessimistic on whether the Fed will raise rates in September, with Dudley adding that new information could make raising rates “more compelling” by the time of the September 16-17. And so while many in the market may have made up their minds on what the Fed is going to do, the situation seems highly uncertain.
  3. On the economic data front, durable goods orders for the month of July came in better than expected, with orders rising 2% against the prior month and 2.2% on a “core” basis, which excludes defence orders and aeroplanes. In a note to clients following the report, Ian Shepherdson at Pantheon Macro said the “core” figure was the report’s best news, adding that, “This is consistent with our view that the drop in equipment spending in the oil sector is now over, and that the rising underlying trend in non-oil spending is now becoming the dominant force again.”
  4. And while the volatility in the stock market has taken center stage, the underlying activity in the economy still appears robust. Business Insider’s Bob Bryan rounded up a number of comments from economists on Wall Street, who almost uniformly asserted that the theme of a steadily, but not spectacularly, improving US economy remains intact.
  5. In individual stock news, one of the biggest merger proposals of the year blew up when agricultural giant Monsanto revealed that it would drop its pursuit of crop-protection product maker Syngenta. The news sent shares of Monsanto up about 8% while US-listed ADRs of Syngenta fell 13%. A potential tie-up between the two companies would have been valued at around $US45 billion.
  6. And while it seems like old news by the US close, keep an eye on China’s market open on Wednesday night. In Wednesday’s overnight session intervention from Chinese authorities was not enough to stop the Shanghai Composite from having a wild ride, with the index eventually closing in the red for the third straight day this week. The Shanghai Composite is now down 43.5% from its peak and its gain over the last year has been trimmed to just 33% after the index had more than doubled.

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