The Dow Jones Industrial Average climbed more than 800 points in late trading to close the day 260 points in the green.
A rollercoaster ride saw the Dow register a record 1000-point gain yesterday, before swooping more than 600 points into the red earlier today.
The Dow closed up 1.1 percent to 23,139.
"This is choppiness part of the market establishing a base," Harbour Asset Manager research analyst Shane Solly says.
"While the degree of market volatility is high, it's normal for equity markets to have several negative periods in any 12 month period - perhaps because we have seen an extended period of low volatility a move to more usual market moves is surprising some."
The NZX is likely to trade slightly softer, Solly says.
"The NZ market didn't participate to the same degree yesterday - but with its high exposure to electricity generators should benefit from ongoing support for utilities, and improving investor enthusiasm for parts of the technology sector may give a lift to some of the NZ markets exciting technology companies which have seen some softness recently."
Volumes are very light during the holiday period, making already volatile markets even more choppy, the Harbour analyst says.
"In our view this period of elevated market volatility may be providing the opportunity to invest in attractive companies at what may prove to be attractive stock prices for patient investors,"
December has been brutal for Wall Street. A number of factors, including a trade conflict with China, interest-rate hikes, President Donald Trump's attacks on the Federal Reserve and a partial government shutdown, have rattled investors in the worst month since the financial crisis. Since the Dec. 1, the S&P 500 is down more than 10 percent.
On Wednesday, after a rough 4-day losing streak and a notably bleak Christmas Eve, markets were buoyed by reports of record-breaking holiday retail performances and assurances by Trump that Federal Reserve Chairman Jerome Powell's job was not in jeopardy. The Dow snagged its biggest point gain in history , surging 1,086 points.
But some analysts were not confident the buying would continue.
"While yesterday's rally was very encouraging, we could see some additional selling in the last few days of the year while ongoing concerns over the government shutdown and existing concerns over the near-term economic outlook," Ivan Feinseth, chief investment officer at Tigress Financial Partners wrote in a note to investors Thursday.
Wednesday's success in US markets was also met with skepticism in Asia and Europe, where markets reopened after a Christmas break. Japan's Nikkei 225 index jumped nearly 4 per cent to 20,077 after suffering big losses earlier in the week.
But other Asian markets were relatively neutral. The Shanghai Composite index slipped 0.6 per cent to 2,483.09; the Hang Seng Index was down 0.7 per cent at 25,478.88. In Europe, post-Christmas performance was shaky.
Germany's DAX fell 0.3 per cent to 10,601.98; France's CAC 40 rose 0.8 percent to 4,664.54.
Britain's FTSE 100 was flat at 6,685.64.
The end of 2018 has brought a chain of political surprises, including the sudden resignation of Defense Secretary Jim Mattis and Trump's withdrawal of US troops from Syria against the advice of his national security team. While some predicted Trump might soften his stance in the budget dispute over the border wall after seeing the uncertainty rile the markets, his tweets Thursday morning suggested that the government shutdown might extend into the new year.
"Have the Democrats finally realized that we desperately need border security and a wall on the southern border," the president tweeted. "Do the Dems realize that most of the people not getting paid are Democrats? "
With reporting by the Washington Post.