AP Photo/Richard Drew

Stocks erased sharp losses Thursday, a day after the best session for the major averages in nearly a decade.

Equities are on track for their worst month since the 1930s.

Watch the US indexes trade in real time here.

Stocks erased sharp losses in a choppy trading session Thursday as concerns about political turmoil in Washington and trade tensions continued to unsettle investors, a day after a dramatic rally led Wall Street to its largest percentage gains in nearly a decade.

After earlier dropping more than 600 points, the Dow Jones Industrial Average erased losses and settled more than 250 points higher, or about 1.1%. The S&P 500 gained 0.8%, and the Nasdaq Composite rose 0.4%. All three US indexes had been down more than 2% each at session lows.

Even after Wednesday's surge, which saw the Dow jump more than 1,000 points to post its best daily point increase on record, a series of sharp sell-offs have put stocks on track for their worst month since the Great Depression.

"Buying sentiment towards global equity markets skyrocketed yesterday due to an apparent return of risk appetite and rebounding oil prices," Lukman Otunuga, a research analyst at FXTM, said. "However, with geopolitical risk factors leaving global sentiment extremely fragile, the upside was poised to be limited."

A rally among high-flying technology stocks paused on Thursday, with Amazon shedding 0.63%. Facebook, Alphabet, and Netflix, meanwhile, were slightly higher.

Oil also pared gains and descended further into a bear market, down more than a third from October highs. West Texas Intermediate was trading at about $45.40 a barrel and Brent just under $54.

Congress was set to reconvene after a holiday break on Thursday, the sixth day of a partial government shutdown over border-security funding. Signs of progress remain elusive, however, after President Donald Trump doubled down on demands for his long-promised wall along the US's southern border.

"The tone and nature of the discourse out of Washington these days (as well as the delivery method itself) has added an extra degree of uncertainty and caution to the markets," Scott Buchta, a strategist at Brean Capital, said in an email. "As the rhetoric becomes more disruptive and dangerous, investors push back by taking risk off the table and wait for the dust to settle."

Adding to uncertainty, Reuters reported that Trump is considering an executive order that would block US companies from using equipment from China’s Huawei Technologies and ZTE in the new year. That could stir tensions between the largest economies as they race to settle a trade dispute ahead of a March deadline.

The dollar slumped 0.4% against a basket of major peers after consumer confidence readings dropped by the most since 2015. Treasury yields also fell, with the 10-year down 1.3 basis points to 2.784% and the 2-year 3.4 basis points lower at 2.573%.

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