The Dow Jones industrial average surged more than 400 points in the first minutes of trading Wednesday, after falling for six straight days and despite mixed results in foreign markets overnight.
China’s Shanghai Composite Index fell 1.3 percent, even with the government’s interest rate cut the prior day. Japan rallied 3.2 percent, while European markets were roughly flat.
Among Massachusetts companies, technology and biotech stocks were rallying Wednesday morning, Hopkinton data-storage company EMC Corp. jumping 4.2 percent and drug maker Biogen Inc. up 2 percent.
Investors have been experiencing intense volatility since Friday, and Monday delivered a stunning 1,000-point dive in the Dow before recovering half of that loss. Wall Street is expecting the ups and downs to continue for the foreseeable future, as economists and business owners try to sort out what China’s slowdown will mean for global growth.
Many market observers continue to say that the 10 percent correction is natural, after six years of a bull market. But deeper concerns lurk, about whether the Federal Reserve will delay its expected rate increase this fall, and how emerging and developed economies will adjust to lower demand for commodities, and perhaps consumer goods, from the world’s second-largest economy.
Mohamed El-Erian, chief economic adviser at Allianz SE and a nationally known bond expert, told Bloomberg Television that the central bank missed its window to raise rates without adding risk to the markets and the economy.
The Fed’s rate-setting committee is scheduled to meet next on Sept. 16.
The Investment Co. Institute said in its weekly report on mutual fund flows that in the week before the Dow started to fall, investors were pulling money out of domestic funds and pouring it into world stock funds.
In the week ended Aug. 19, investors pulled $5.2 billion out of US stock funds, and put $4.7 billion into world funds, potentially opening themselves up to the declines in foreign markets at the same time they evaded some of the domestic losses.
Money has been steadily flowing out of US funds in recent weeks, the ICI reported.
By 10:50 a.m., US stocks were hanging onto gains of 1.5 percent on the major indexes.
Material from the Associated Press was used in this report.