The budget deal "is providing a benefit to the market, but I´d be more focused on the discussion around wage growth than worrying about that", said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.
USA equity markets staged a comeback yesterday after a sharp sell-off, with Asian and European shares following Wall Street higher in today's trading.
Stocks swung from negative to positive after indexes started the session 2 percent lower, underscoring a return of volatility to a market that until recently was marked by an absence of major shifts, the news agency said.
Traders are still braced for more volatility as they try to figure out if the swings of the past few days are the start of a deeper correction or just a temporary blip in the USA market's nine-year bull run.
"Today's market action is a classic of a market that has searched for a bottom", said Peter Cardillo, chief market economist at First Standard Financial In New York, who predicted a rebound back to record levels.
While Wednesday's trading lacked the wild swings of the prior two sessions, the Dow industrials moved in a roughly 500-point range, more than three times the average daily swing over the past year.
USA equity markets had been in a euphoric state since President Donald Trump passed his historic Tax Cuts and Jobs Act reform, which saw corporation tax cut from 35% to 21%.
"The markets went into being religiously over-bought to deeply over-sold in a matter of four trading days", said Adam Sarhan, chief executive of 50 Park Investments, an investment advisory service.
The question is whether the market retreat deepens or whether investors buy at the dip, a mentality that has supported stocks for months.
"We've been looking at this as an opportunity to incrementally add a little bit of risk - not get over our skis, but a little bit", said Erin Browne, head of asset allocation at UBS Asset Management in NY.
The Dow Jones Industrial Average fell 59.07 points, or 0.24 per cent, to 24,286.68, the S&P 500 lost 13.09 points, or 0.49 per cent, to 2,635.85 and the Nasdaq Composite dropped 2.63 points, or 0.04 per cent, to 6,964.90.
After regular cash trading on Wednesday, S&P e-mini futures fell 1 per cent, suggesting the negative tone would continue on Thursday.
Defensive sectors utilities and real estate lagged, while technology and consumer discretionary were among the top-performing sectors.
"While today would be crucial in seeing if the bulls can wrestle back control for Asian markets, it does appear that we have finally entered a period of increased volatility", says Jingyi Pan, market strategist at IG in Singapore. Oil has shed 4.9 per cent.
The U.S. economy looks very healthy.
Despite the recent turmoil, the Dow remains up nearly 40% since President Trump's election. "But I don't think anyone expected the velocity or the ferocity that we saw on the downside".
Stocks slumped again on Monday, extending the volatility that emerged last week as investors grew more anxious about turmoil in the bond market. That could force the Federal Reserve to raise interest rates faster than planned.
US stocks fell in volatile afternoon trading on Tuesday after shedding gains, following the biggest one-day declines for the S&P 500 and the Dow in more than six years.
Wells Fargo suffered some of the worst of the selling on Monday.
However, on Monday Treasurys made a sharp reversal, with selling during the morning changing over to buying by investors that are anxious about the stock prices taking a sharp drop.
US Treasury Secretary Steven Mnuchin said recent volatility was not enough to rock market fundamentals.
USA stocks overturned early losses to trade higher on Wednesday as some buyers returned to a market still shaking from a record fall for the Dow Jones Industrial Average earlier this week.