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Wall St. Climbs After Days of Selling as Attention Turns to Drama in Washington Wall St. Jumps After Days of Selling as Fed’s Williams Signals Flexibility
(about 1 hour later)
HONG KONG — Stocks on Wall Street drifted higher early Friday, recovering from days of selling as investors watched developments in Washington, where a government shutdown loomed Stocks on Wall Street spiked Friday as investors latched onto comments from a Federal Reserve official that suggested the central bank is more flexible about its plans for monetary policy than it had indicated earlier in the week.
The gains came after another day of steep declines on Thursday that left the tech-heavy Nasdaq composite close to a bear market, defined as a 20 percent decline from its peak. Speaking on CNBC, Federal Reserve Bank of New York President John Williams said the central bank could reassess its views next year. The S&P 500 stock index, which was slightly higher in early trading, began to climb as Mr. Williams spoke. But those gains quickly faded.
The stock market’s most recent swoon began on Wednesday afternoon, after the Fed, citing the strength of the economy, signaled that it planned to keep raising interest rates and shrinking the extraordinary amount of support it has provided to financial markets in the decade since the financial crisis.
The selling had brought the S&P 500 Index down more than 15 percent from its peak by Thursday. The tech-heavy Nasdaq composite is close to a bear market, defined as a 20 percent decline from its peak.
With stock benchmarks down sharply in the past few months, and concerns about economic growth mounting, investors had hoped that the Fed would say it had taken note of their concerns. Instead, on Wednesday, as the Fed announced a quarter-point interest-rate increase, it mostly stuck with its line that the economy is strong.
[Read more about how technology giants like Apple, Amazon and Facebook have led the market lower.][Read more about how technology giants like Apple, Amazon and Facebook have led the market lower.]
Investors have their pick of worries these days. A decline that initially reflected concerns that economic growth and corporate profits may slow, accelerated this week after the Federal Reserve made matters worse this week when it signaled that it doesn’t plan to ease its monetary tightening like investors had hoped. Investors have their pick of worries these days from concerns that economic growth and corporate profits may slow as the trade war grinds on and interest rates continue to rise.
[Read more about why Wall Street suddenly sees risks everywhere.][Read more about why Wall Street suddenly sees risks everywhere.]
Though investors have largely ignored government shutdowns in the past, expectations that Congress and the White House won’t reach an agreement for a stopgap spending bill helped fuel Thursday’s decline. Lawmakers have a deadline of midnight Friday to agree on a budget or spending bill that will keep the government open.Though investors have largely ignored government shutdowns in the past, expectations that Congress and the White House won’t reach an agreement for a stopgap spending bill helped fuel Thursday’s decline. Lawmakers have a deadline of midnight Friday to agree on a budget or spending bill that will keep the government open.
[Here’s a rundown of the turmoil in Washington D.C.][Here’s a rundown of the turmoil in Washington D.C.]
The recovery on Wall Street early Friday came after investors in Asia drove most major markets lower, with a few notable exceptions. European markets followed, sinking lower in early trading and remaining down into the early afternoon. The recovery on Wall Street early Friday came after investors in Asia drove most major markets lower, with a few notable exceptions. European markets followed, sinking lower in early trading before recovering.
Stocks in Asia have been buffeted by signs of trouble in the United States and by the slowing of the Chinese economy, the region’s main driver of growth.Stocks in Asia have been buffeted by signs of trouble in the United States and by the slowing of the Chinese economy, the region’s main driver of growth.
After the Asian markets closed on Friday, a top Chinese policy committee, the Central Economic Work Conference, pledged to “implement active fiscal policies,” a signal that Beijing might increase government spending to hasten growth.After the Asian markets closed on Friday, a top Chinese policy committee, the Central Economic Work Conference, pledged to “implement active fiscal policies,” a signal that Beijing might increase government spending to hasten growth.
Without including details, the committee also reiterated recent promises by President Xi Jinping that taxes for business would be cut, among other measures.Without including details, the committee also reiterated recent promises by President Xi Jinping that taxes for business would be cut, among other measures.
There were some bright spots in trading on Friday. Most stocks did not fall as far as the S&P 500 had on Thursday, when it ended the day down 1.6 percent. Still, a tumultuous day in Washington and continuing worries about the global economy gave investors little to cheer about.There were some bright spots in trading on Friday. Most stocks did not fall as far as the S&P 500 had on Thursday, when it ended the day down 1.6 percent. Still, a tumultuous day in Washington and continuing worries about the global economy gave investors little to cheer about.
• In Japan, the Nikkei 225 index fell 1.1 percent. In China, the Shanghai Composite index was down 0.8 percent. The Hang Seng Index in Hong Kong rose late in the day, finishing 0.5 percent higher. The Kospi index in South Korea also ended higher.
• In Europe, the Euro Stoxx 50, a measure of blue-chip shares, was down almost 0.5 percent. In Britain, the FTSE 100 pared some of its losses after sinking through the morning and was down just over 0.2 percent by early afternoon. France’s CAC 40 fell a little further, about 0.3 percent, and the Dax in Germany slid about 0.3 percent.