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BOOM: Stocks soar 5%, Dow adds a record-breaking 1,086 points

The S&P 500 and the Dow each clocked their biggest single-session point gains on record on Wednesday.

The S&P 500 (^GSPC) rose 4.96%, or 116.6 points, as of market close. On a percentage basis, the index advanced in its best session since March 2009. The Dow (^DJI) surged 4.98%, or 1,086.25 points, posting its best session for the day-after-Christmas ever. The Nasdaq (^IXIC) rose 5.84%, or 361.44 points, and also posted its best percentage advance since March 2009.

Shares of tech giants were some of the biggest gainers during Wednesday’s session. The combined gains of Amazon (AMZN), Microsoft (MSFT), Apple (AAPL), Google (GOOG, GOOGL), Facebook (FB) and Netflix (NFLX) during Wednesday’s session alone totaled $242.7 billion in market capitalization. Retail stocks also got a boost following a report that holiday spending increased the most in six years this season.

The three major indices completely regained losses after a crushing session on Monday, which had been the worst Christmas Eve for stocks on record. At the end of Monday’s session, the S&P 500 was lower by 19.77% from its year-to-date closing high of 2,930.75. The index closed lower by 20% from its intraday high of 2,940.91 from September, reaching the percentage decline from a recent peak many consider to define a bear market.

Stocks are currently trading in the seven-day period that often brings a so-called “Santa Claus rally,” an annual window during which equities tend to rise. The event takes place during the last five trading days of the year through the first two trading days of the new year. The S&P 500 has averaged a 1.7% gain and traded higher about 78% of the time during this period since 1928, analysts from Oppenheimer wrote in a note Wednesday. However, in the event of a failed Santa Claus rally, stocks have historically lost an average of 1.2% over the next three months.

For the seven trading sessions just before this year’s Santa Claus rally period began on December 24, the S&P 500 fell by 8.83%.

Investors are continuing to digest commentary from President Donald Trump, who told reporters at the White House on Tuesday that he thought U.S. companies were having “record kinds of numbers” and that now is a “tremendous opportunity to buy” stocks amid the months long downturn. At current levels, the price-to-earnings ratio of the S&P 500 is just above 13 times estimated earnings for the coming year, giving U.S. equities the most attractive valuations in about five years, according to Bloomberg data.

Trump also said that he has “confidence” that the Federal Reserve will “get it pretty soon” when it comes to interest rates, which the president believes have been rising too quickly. The comments helped to quell concerns over the future of Fed Chairman Jerome Powell, whom Trump has consistently publicly slammed over the Fed’s path of interest rate increases.

On Wednesday, White House economic adviser Kevin Hassett told reporters that Powell’s job is “100%” safe, even amid Trump’s repeated lambasting. Bloomberg reported late last week that Trump had considered ousting Powell over the recent rate hikes, which have contributed in part to market volatility. But Hassett’s public reassurances echo those of Treasury Secretary Steven Mnuchin, who said in Twitter posts earlier this week that Trump “never suggested firing” Powell.

Meanwhile, crude oil prices also surged after U.S. West Texas Intermediate crude oil futures settled at their lowest level since June 2017 on Monday. U.S. crude prices (CL=F) rose 8.7% to settle at $46.22 per barrel. Brent crude prices (BZ=F) rose 7.69% to $54.35 per barrel as of 2:33 p.m. ET.

STOCKS: Retail stocks rise as holiday spending surges, Citron Research raises Facebook’s price target

Retail stocks rose after Mastercard (MA) reported that U.S. retail sales were the strongest in six years between November 1 and December 24. For the period before Thanksgiving through Christmas, holiday sales increased 5.1% to more than $850 billion, according to a report by Mastercard SpendingPulse. Online shopping grew 19.1% versus the same period in 2017, while online sales growth for department stores alone rose 10.2%. Shares of Target (TGT) rose 5.78% to $65.11 each, shares of Walmart (WMT) increased 5.35% to $90.41 each and shares of Macy’s (M) rose 7.03% to $30.13 each as of market close. The S&P retail exchange-traded fund XRT (XRT) advanced 5.75% to $40.66 per share.

Shares of Facebook (FB) climbed after Citron Research raised its price target on the stock to $160 per share from $120 previously. The new price target represents about 30% upside from Facebook’s closing price on Monday. The research firm said in a report Wednesday that “never before has Facebook been this compelling of an investment opportunity,” even as a flurry of corporate scandals battered the social media giant’s stock this year. “The truth is revenues and more important user base has seen little impact,” Citron wrote, especially as users herd to Facebook-owned Instagram. Shares of Facebook rose 8.16% to $134.18 each as of market close.

Investment firm Needham named Roku (ROKU) a top stock pick for 2019, sending shares of the digital streaming company soaring. The firm said the company has a strong position in a growing streaming market, with Roku reaching 24 million unique active users in the third quarter. Needham analyst Laura Martin rates shares of Roku as Buy with a price target of $45. Shares of Roku rose 11.7% to $30.35 each as of market close.

Intel (INTC) received a $185 million grant from the Israeli government for a promised $5 billion expansion of the company’s production operations in Israel. The Santa Clara, California-based tech company is among the largest employers and exporters in Israel and is expected to hire 250 new employees and increase its local purchases as a result of the deal. Shares of Intel rose 5.96% to $46.19 each as of market close.

Traders work on the floor of the New York Stock Exchange on Monday, Dec. 24, 2018. (AP Photo/Seth Wenig)

JD.com (JD), a Chinese e-commerce giant, said on Wednesday that its board authorized a $1 billion share buyback program, which will be funded using its existing cash balance. JD.com’s stock has recently come under pressure amid concerns of a slowdown in China’s economy, as well as public scrutiny over potential sexual assault charges against the company’s CEO Richard Liu. U.S. prosecutors in Minnesota said on Friday they would not file charges against Liu. Shares of JD.com rose 6.84% to $21.10 per share as of market close.

A top Amazon (AMZN) executive reportedly privately advised the Trump administration on creating a new internet portal that could generate billions of dollars for the e-commerce company, according to a report from The Guardian. While the contract for the new portal has not yet been awarded, it could potentially provide an access point for Amazon into a $53 billion market for federal purchases of commercial products, according to the UK newspaper. Shares of Amazon rose 9.45% to $1,470.90 per share as of market close.

ECONOMY: Growth in U.S. home prices decelerated in October

The pace of increases for U.S. home prices decelerated in October, according to data released Wednesday from the S&P CoreLogic Case-Shiller 20-city home price index. The index rose 5.03% from a year earlier in October, versus an annual advance of 5.2% in September. Consensus expectations had been for a gain of 4.86% in October, according to data compiled by Bloomberg.

The Federal Reserve Bank of Richmond’s manufacturing index tracking factory activity across a spectrum of eastern U.S. states fell to negative 8 in December, tumbling from a positive 14 in November. Consensus estimates had been for the index to register an increase to 15, and levels greater than 0 indicate growth. Declines in new orders and shipments weighed on the index, although the index for employment rose, the Richmond Fed said in a statement.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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