Dow ends up more than 200 points
NEW YORK -- Stocks finished sharply higher Wednesday, ending their worst start to a year since 2008 after the release of minutes of the Federal Reserve's meeting last month, holding onto earlier gains driven by rising hopes for more monetary stimulus from the European Central Bank and good news on the U.S. job market.
The Dow, S&P 500 and Nasdaq composite each ended up about 1.2% -- including a nearly 213-point gain for the Dow. The large-company S&P 500 stock index snapped a five-session losing streak, its longest in more than a year.
The blue-chip Dow is saw its best point gain since Dec. 18.
In the minutes of the Fed's December 16-17 meeting, released at 2 p.m. ET, the U.S. central bank noted that economic weakness abroad posed a "downside risk" to the U.S. economy, but shrugged off those worries because they expect "further responses" from foreign central bankers to help jumpstart growth abroad. The minutes reiterated that the Fed would be "patient" when it begins raising interest hikes as expected later this year.
U.S. stocks also got a boost from some solid economic data. Payroll processor ADP reported that 241,000 private sector jobs were created in December, topping expectations. The strong jobs report helps confirm that the U.S. economy ended 2014 with solid momentum, analysts say.
And the U.S. trade deficit, helped by a sharp drop in energy prices, dipped more than expected to $39 billion. The improved deficit number prompted Barclays to up its fourth-quarter U.S. GDP estimate to 3.5% from 2.7%.
The big story early in the session was the latest reading on Eurozone inflation. Annual inflation in December fell 0.2%, its first annual decline since October 2009, according to Barclays. The negative inflation reading sparked fresh fears that the Eurozone is in danger of falling into a deflationary spiral amid an economy that is now contracting.
However, investors around the globe viewed the ominous inflation readings as a bullish data point, as it puts more pressure on the ECB to roll out a full-scaled, sovereign-bond asset-buying program later this month when it meets. More stimulus from the ECB is viewed as a positive by investors, which view the more aggressive stimulus as a key to getting the Eurozone economy back on track.
"Very low inflation adds pressure on the ECB to do more," Mary Catherine Sinclair of Strategas Research Partners told clients in a note Wednesday. While the effect of so-called quantitative easing on the real economy is "indirect at best," she notes that central bank action the past few years at least shows that central banks "can prevent deflation, if not create inflation."
Many Wall Street chart readers also said the stock market is "oversold" after the early-year selloff and was due for a so-called "bounce."
Investors are shrugging off a deadly terror attack in Paris waged against a French satirical magazine.
The flight-to-safety trade which was a popular one on Tuesday amid a continued slide in oil and stock prices has abated somewhat today, with U.S. government bond yields ticking slightly higher and an ounce of gold losing 0.6% of its value.
Global stock markets snapped two days of declines Wednesday but gains were tempered by worries about the plunge in oil prices and renewed doubts about Greece's membership of the euro currency bloc.
In Asia, Japan's Nikkei 225 index was up 0.01% and Hong Kong's Hang Seng index rose 0.8%.
Germany's DAX is up 0.5% and France's CAC-40 is 0.7% higher. Britain's FTSE 100 is advancing 0.8%.
Oil has traded in volatile fashion today, At its low point, it fell again, nearing a six-year low. the benchmark U.S. futures contract hit a nearly six-year low of $46.83, before rebounding and turning higher on the day. At around 11:15 a.m. ET, West Texas Intermediate crude was up 29 cents, or 0.6%, to $48.22. The contract tumbled $2.11 to close at $47.93 on Tuesday. It has dropped 47% in the past three months as demand weakened and supplies stayed high.
Brent crude was down 39 cents at $50.71 on the ICE exchange in London. Earlier in the session it fell below the key $50 level for the first time since 2009.
On Monday, the Dow Jones industrial average suffered its worst one-day decline since Oct. 9, when it tumbled nearly 335 points. The Dow ended down about 130 points, an 0.8% loss on Tuesday, while the S&P 500 and Nasdaq composite were down 0.9% and 1.3%, respectively.
Tuesday's weakness was again driven by sinking oil prices and worries about political and economic troubles abroad.