One day after a broad-based, stomach-churning drop in the market, the result of rising economic fears following Apple's revenue guidance cut and a plunge in the ISM manufacturing index coupled with jitters over the latest FX-market flash crash, stocks staged a powerful comeback, recouping all of their Thursday losses, on the back of renewed optimism over US trade negotiations with China, a Chinese RRR cut and a powerful intervention by Beijing's plunge protection team in Chinese stocks, and a stellar jobs report.

“The strong December jobs report is a net positive for stocks because investors’ biggest concern has been slowing growth,” said FTSE Russell managing director Alec Young. "December’s strong job gains help ease that concern. It’s hard to square recession worries with the strongest job growth we’ve seen in years" Young added after payrolls not only surged by over 300K but average hourly earnings surprised to the upside and rose by the most since 2009, signaling that inflation is anything but dead.

But the biggest catalyst for today's rally was today's statement by Chairman Powell which eased much of the market's fears that the Fed put is dead and buried.

Speaking on a panel with Janet Yellen and Ben Bernanke, Powell said central-bank policy is flexible and officials are “listening carefully” to the financial markets. Critically for traders worried about shrinking liquidity in the economy, Powell also signaled a willingness to consider changes to the Fed’s gradual run-off of its balance-sheet in any policy review.

That was enough to unleash the animal spirits, with stocks surging after Powell's comments which many saw were directed squarely at the market.

“The Powell/Yellen/Bernanke show had a simple purpose: re-assure the market that the Fed is not in disarray and that it will act to protect the market on a further downtick than what we saw in December,” WallachBeth strategist Ilya Feygin told Bloomberg. “The Fed will likely keep rates on hold for a while until it has more confidence in the data.”

And while Powell wasn't explicitly dovish, the fact that he wasn't hawkish was more than enough to unleash a powerful rally that sent the Dow over 800 points at one time, undoing all of Thursday's losses...

...with the S&P rising over 3% and back above 2,500, the Nasdaq rising almost 5%, and most other sector also solidly in the green on what has nonetheless been a relatively low-volume rally.

While today's rally will be a welcome - if temporary - relief to bulls, and certainly to president Trump who delights in a rising stock market which he sees as a barometer of his performance, the unprecedented volatility in the market now appears to be a constant feature with the the S&P 500 now trading in an intraday range of more than 2% on 15 of the last 21 days, the most since 2011 according to Bloomberg. Whether anyone other than algo traders can "trade" such a rollercoaster market remains to be seen.

The surge in stocks, driven by a dovish take on Powell, also helped push Treasury yields sharply higher...

... with the yield on the 10Y rising the most in percentage terms in two years.

Curiously, even as selling of equity volatility returned with a bang, with the VIX tumbling to the 20 level which has been the average for much of the past three months...

... bond market volatility as measured by the MOVE index has been far stickier, in what may prove to be a bigger headache for the Fed unless it is somehow able to stabilize the jittery nerves of bond traders.

One surprising outlier that was missing from today's euphoria, however, as the dollar continued its recent slide, and after it initially spiked following the strong jobs report, it then tumbled after Powell's dovish comments despite the powerful rally in Treasury yields.

According to some this odd weakness in the dollar was the result of a fund rotation into carry currencies, with the Bloomberg EM Carry Index reaching its strongest level since July, in the process undoing all of the carry trade "flash crash" pain from late on Wednesday.

Another surprising tangent is that even with the dollar plunge, gold tumbled and was down sharply on the day if off the lows, even after gold futures hit $1300 overnight. One explanation is that gold was not responding to the dollar as much as to the unwind of the "flight to safety" trade. However, even with today's drop, gold is back to levels last seen back in June.

And while they did nothing for gold, Powell's dovish reversal and the plunge in the dollar did help boost the commodity sector, and oil especially, which has continued its impressive move higher after a powerful, if unexplained, move on Wednesday sent WTI surging, with the levitation continuing ever since.

Finally, even with Friday’s surge, the market gains did little to dent the recent rout that has hit global equities in the past month, with major indexes off well over 10 percent from previous highs and the S&P on the verge of a bear market as recently as ten days ago. Meanwhile, in a sign that fears about a slowdown persist, treasury yields that topped 3.2% two months ago are now 60 bps lower as investors reassess the prospects for growth in 2019.

Finally, before traders read too much into today's rally, recall what Trump's economic advisor Kevin Hassett warned yesterday, namely that "it’s not going to be just Apple,” adding that "there are a heck of a lot of U.S. companies that have sales in China that are going to be watching their earnings being downgraded next year until we get a deal with China."

For now, however, at least until the next major bearish surprise, stocks close out the day and the week with a powerful rally that has, at least for the time being, put concerns about an imminent US recession on mute.