The Dow Jones Industrial Average was up 311.78 points, or 1.21 percent, to 26,029.52. Energy sector was the only laggard, losing 0.06 percent.
Bond prices continued to rise sharply, sending yields to their lowest level in almost three years.
"We're getting a nice move here, but if you look at what the tone of the market might be for the next few days it still could be under some pressure, " said Jeff Kravetz, regional investment director for US Bank Wealth Management.
The S&P 500 fell 51 points, or 1.8%, to 2,880. The index had been down 2% during the heaviest bout of selling. It had been down as much as 589 points.
Meanwhile, the technology-focused Nasdaq Composite Index (NYSEARCA:QQQ) fell 3.5% to 7,726.04.
USA stocks slipped on Wednesday, as investors reeling from rising trade tensions fled riskier assets for perceived safer havens, leading the bond market to price in a slide into recession. Stocks had been reeling from last week's shock when Trump vowed to slap a 10% tariff on a further $300 billion in imports from China.
The Cboe Volatility Index (VIX), widely belief to be to be the finest dread gauge within the market, jumped 36% to above 23.
The rate cut was largely in line with expectations. The yield on the 10-year Treasury dropped to 1.64% from 1.74% late Tuesday, a large move. It was above 3% in late November.
"I see some stocks that look great that I'm buying today", said George Young, portfolio manager at Villere & Co.
It's not just a USA bond market phenomenon.
Gold's run can largely be attributed to the escalating trade war between the U.S. and China, which is causing stocks to slump in North America, as well to a weakened dollar following last week's first USA interest rate cut in over a decade by the Federal Reserve. Unemployment is at the lowest level in decades and consumer confidence remains strong. The gap between the yield on the three-month Treasury and the 10-year Treasury widened further. This so-called inversion between the two maturities has preceded every USA recession in the past 50 years.
The push into safer investments lifted U.S. gold futures briefly above $1,500 per ounce on Wednesday for the first time in more than six years.
ASIA'S DAY: The mood was subdued earlier in Asia.
Traders raised bets that the Federal Reserve will respond by cutting key borrowing costs three more times by the year's end, with markets fully pricing in a rate cut in September.
From a USA geopolitical strategy perspective, consultancy Enodo Economics sees the EQUITABLE Act as squeezing China's capital connections in an effort to "bring elite pressure to bear" on Chinese leader Xi Jinping. More than three quarters of the S&P 500 have reported financial results.
Wall Street was set to open higher at the opening bell, with Dow futures and the broader S&P 500 futures up 1%.
Hong Kong fell 2.4 per cent while Shanghai and Sydney shed 2.6 per cent. Manila and Wellington were also down around two percent.
Banks sustained some of the worst losses Wednesday.
Worries about a slowdown in global growth due to an extended trade conflict also hurt oil prices. The Nasdaq fell 309 points, or 3.9%, to 7,694. Natural gas rose 4 cents to $2.11 per 1,000 cubic feet.
Dow Jones prices nosedived at a time of heightened volatility in the financial markets with the pan-European Stoxx 600 falling by nearly 2 percent - on top of a 2.5 percent drop seen on Friday, the worst performing day for it in 2019. Apple rose 1.3% and Microsoft added 1%.
The dollar fell to 105.69 Japanese yen from 106.52 yen on Tuesday. The euro strengthened to $1.1202 from $1.1113.
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