NEW YORK - Stocks shook off morning losses on Monday and surged in afternoon trading, putting the Standard & Poor's 500 index on pace for its best day in a week. It's the latest turn for a market suddenly prone to quick shifts not only day to day but also hour to hour. The volatility comes as investors question whether a global trade war is really on the way and how quickly interest rates will rise.
KEEPING SCORE: The Standard & Poor's 500 index was up 33 points, or 1.2 per cent, at 2,724 as of 3:20 p.m. Eastern time. It had been down as much as 0.6 per cent earlier.
The Dow Jones industrial average was up 379 points, or 1.5 per cent, to 24,917, and the Nasdaq composite rose 86 points, or 1.2 per cent, to 7,344.
TRADE WORRIES: The most recent trigger for wild swings in the market was President Donald Trump's promise last week to impose stiff tariffs on imports of steel and aluminum. Investors fear it could lead to an escalating trade war that stymies a global economy finally growing in sync.
Trump again took to Twitter on Monday to defend the tariffs, which have riled trading partners around the world and already triggered threats of retaliation. Trump highlighted trade deficits with Canada and Mexico, and he said tariffs "will only come off if" a new free-trade agreement between the three countries is signed.
Investors have been questioning whether Trump's initial promise will prove to be just an opening bid in negotiations, with the actual move being less consequential. Stocks pared sharp losses on Friday amid such speculation. On Monday, House Speaker Paul Ryan urged the White House "not to advance with this plan" and said he is "extremely worried about the consequences," according to a statement issued by his office.
"It's incredibly difficult to try to understand the whims of this current administration and to try to make forecasts," said Emily Roland, head of capital markets research for John Hancock Investments. If a trade war does occur, it would hurt the strength of the global economy and the healthy profit growth that companies have been producing, two of the big drivers for the market. "But right now, we think the impact should continue to be modest, as long as it's all talk and no action," she said.
VOLATILE RIDE: From its low point of the day to its high, the S&P 500 carried investors through a swing of 1.9 percentage points. It's the fifth straight day with a gap of more than 1.5 percentage points, and trading has become much more wild since the market's remarkably placid, record-setting run from 2017 into January. During that period, the typical day saw the S&P 500 drift just 0.5 percentage points from its low point to high.
INSURANCE FIRST: XL Group jumped to the biggest gain in the S&P 500 after AXA said that it will acquire the insurance and reinsurance company for $15.3 billion in cash. Investors will get $57.60 per XL Group share, and its stock surged $12.40, or 28.6 per cent, to $55.70.
MIXED GLOBAL MARKETS: European markets were mostly higher, with Italy an exception after elections there saw no single party emerge with a majority in Parliament. That raises uncertainty about how closely Italy will work with the rest of the European Union.
France's CAC 40 rose 0.6 per cent, Germany's DAX gained 1.5 per cent and the FTSE 100 was up 0.7 per cent in London.
In Asia, Japan's Nikkei 225 fell 0.7 per cent, South Korea's Kospi dropped 1.1 per cent and the Hang Seng in Hong Kong lost 2.3 per cent.
Stocks in Shanghai edged up after Beijing set an annual growth target for the world's No. 2 economy of "around 6.5 per cent" for 2018. That's down from 6.9 per cent last year, but still robust.
INTEREST RATES: The first thing that jolted markets from its peaceful rise to records was a jobs report in early February that raised the spectre of higher inflation. That has investors keyed in for Friday, when the latest jobs report will arrive from the government.
If wages continue to accelerate, investors would likely see it as more evidence that the Federal Reserve will raise interest rates higher and faster than expected, which could further upset markets. As a demonstration of how nervous investors are, John Hancock's Roland pointed to Fed Chairman Jerome Powell's testimony before Congress last week, where he said the economy is improving.
"That first day, he didn't say anything he hadn't said before, and the market was so volatile," Roland said.
The yield on the 10-year Treasury rose to 2.88 per cent on Monday from 2.87 per cent late Friday.
COMMODITIES: Benchmark U.S. crude rose $1.32 to settle at $62.57 per barrel. Brent crude, the international standard, rose $1.17, or 1.8 per cent, to $65.54 a barrel.
Gold fell $3.50 to settle at $1,319.90 per ounce, silver lost 5 cents to $16.41 per ounce and copper was close to flat at $3.13 per pound.
Natural gas added a penny to $2.70 per 1,000 cubic feet, heating oil rose 2 cents to $1.90 per gallon and wholesale gasoline climbed 3 cents to $1.93 per gallon.
CURRENCIES: The dollar rose to 106.20 Japanese yen from 105.54 yen late Friday. The euro dipped to $1.2327 from $1.2331, and the British pound climbed to $1.3833 from $1.3790.