Wall Street rallied strongly yesterday as buyers looked for bargains following the plunge of 554 points by the Dow Jones index on "Grey Monday". Trading opened nervously yesterday morning as selling continued strongly in the first hour and the Dow Jones industrial average of leading blue-chip stocks continued to plunge by 200 points. But then a buying spurt began and sent the index climbing upwards to close at 7,498.32, a record rise of 337.17, at the end of a day's hectic trading.

President Bill Clinton, in a speech in Chicago, made a passing reference to the turbulence on the exchanges but it was to repeat his message of Monday that "our economy is continuing to grow steady and strong". That was "why we have to feel confident and continue our economic strategy" of balancing the budget, expanding trade and investing in the education of all. The chairman of the Federal Reserve, Mr Alan Greenspan, who had already warned about the unrealistic prices of stocks, but without influencing the continued rise, is expected to comment today when he appears before a congressional committee.

In spite of the large fall in share prices on Monday, most commentators pointed to the difference with Black Monday in 1987 when the Dow Jones fell by 22 per cent in one day. This time the fall in percentage terms was 7.2 per cent, and only the 12th-largest since in the history of the New York stock exchange.

Much of the selling was attributed to fund managers anxious to show big gains for the end of year accounts rather than a panic rush by small shareholders. The latter are being widely advised to refrain from selling under the present conditions and to take the longer view.

The Treasury Secretary, Mr Robert Rubin, who made a brief statement on Monday pointing to the health of the economy, strongly advised the White House to refrain from commenting on the swings in the market lest it make matters worse. He is reported to have told the White House that the Dow could fall another 500 points before it bottomed out.