The Dow closed at 22,878.45, up 1,086.25 points, or five per cent, on the day.
The Dow Jones is approximately 500 points away from tumbling into a bear market. Goldman Sachs declined 1.9 percent to $159.82 as the yield on the 10-year Treasury fell to 2.76 percent from 2.79 percent late Wednesday.
Earlier this week, the NY stock exchange recorded its worst-ever Christmas Eve plunge, following reports that US President Donald Trump had considered firing Federal Reserve chairman Jerome Powell.
All 11 sectors of the S&P 500 are now negative for December, the fourth quarter and the full year.
Australia's benchmark index, the ASX 200, rose 1.4 per cent to 5,568 at 10:40am (AEDT).
The losses add to last week's low performance, in what seems like the index's worst week since the 2008 financial crisis.
The Dow had ended at 21,792 points which was about 653 points lower than the high and the trading session that was ahead of the Christmas holiday.
Advancing issues outnumbered decliners by a 1.70-to-1 ratio on the NYSE and a 1.89-to-1 ratio on the Nasdaq. Stocks climbed in Taiwan and throughout Southeast Asia. "That kind of a move, that's got to be the bottom.' But you know what?"
"The key question is whether the market of stellar returns is going to a market of slow or stalling returns", Quincy Krosby, chief market strategist at Prudential Financial, told CNBC. "It's somewhat telling that we didn't cross it, we didn't officially enter into a bear market".More news: President Trump makes surprise Christmas visit to troops in Iraq
More news: Inside 'secret wedding': Miley Cyrus and Liam Hemsworth reportedly tie the knot
More news: No White Christmas For Most Canadians, Weather Network Predicts For 2018
Markets were also buoyed by strong US holiday sales. Trump expressed confidence in Mnuchin on Tuesday.
The partial government shutdown that began over the weekend has weighed on the market.
The bank executives assured the Mnuchin that "they have ample liquidity available for lending to consumer, business markets, and all other market operations", he wrote. But despite evidence that the U.S. economy remains robust, this year could still mark the first bear market in close to a decade.
Stock market volatility works in both directions.
All the cross-currents pushing and pulling markets have analysts along Wall Street recommending a contrasting array of strategies.
This was after the comments by the treasury secretary which had raised eyebrows on the matter of the increasing trade with China.
December is typically a buoyant month for stocks.
The market recovered some losses by late morning. The three catalysts which pushed the market lower in 2015 and 2016 - China, the Federal Reserve, and oil - are roiling "the market yet again in 2018", Stoltzfus said. "We can assess the fundamental drivers, such as poor global economics, the Fed not altering its forward guidance or providing flexibility to the pace of balance sheet normalization, and ascertain nothing has really changed here", he added.
And some optimists are forecasting a big bounce-back year for us stocks, which they say no longer look expensive relative to corporate earnings.