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Stocks Rise as Wall St.’s Roller Coaster Stages Late-Day Rally Stocks Rise as Wall St.’s Roller Coaster Stages Late-Day Rally
(about 3 hours later)
Wall Street’s roller-coaster ride extended into Thursday with stocks staging a late-day recovery as investors turned their attention to fresh data about the United States economy.Wall Street’s roller-coaster ride extended into Thursday with stocks staging a late-day recovery as investors turned their attention to fresh data about the United States economy.
Investors have struggled to find their bearings this month as the S&P 500 hurtled toward bear-market territory, defined as a 20 percent drop from a recent high point. They are trying to assess the prospects for economic growth and corporate profits as interest rates rise and a trade war with China persists, while — most recently — also factoring in internal White House turmoil and President Trump’s antipathy toward Jerome H. Powell, the Federal Reserve chairman. A government shutdown that could deprive investors of economic data usually released by the Commerce Department is only adding to the uncertainty. Investors have struggled to find their bearings this month as the S&P 500 hurtled toward bear-market territory, defined as a 20 percent drop from a recent high point. They are trying to assess the prospects for economic growth and corporate profits as interest rates rise and a trade war with China persists, while — most recently — also factoring in internal White House turmoil and President Trump’s antipathy toward Jerome H. Powell, the Federal Reserve chairman. A government shutdown that could deprive investors of economic data from the Commerce Department is only adding to the uncertainty.
It’s all coming together in a volatile mix, with financial markets lurching this way and that. After a drop of as much as 2.8 percent, the S&P 500 rallied in the final minutes of trading to end up 0.9 percent. The gains added to a surge Wednesday that was the benchmark’s best day since 2009.It’s all coming together in a volatile mix, with financial markets lurching this way and that. After a drop of as much as 2.8 percent, the S&P 500 rallied in the final minutes of trading to end up 0.9 percent. The gains added to a surge Wednesday that was the benchmark’s best day since 2009.
The swings are an indication that the recent declines have gone too far, even if there are reasons to be concerned, said David Donabedian, the chief investment officer for CIBC Private Wealth Management in Atlanta.The swings are an indication that the recent declines have gone too far, even if there are reasons to be concerned, said David Donabedian, the chief investment officer for CIBC Private Wealth Management in Atlanta.
“In the absence of more bad news, a snapback was necessary,” he said.“In the absence of more bad news, a snapback was necessary,” he said.
On Thursday, investors had only a few new clues about the economy’s health to consider, and the signals were mixed. Weekly jobless claims were lower, a positive sign. Expectations for job growth, as measured by the monthly consumer confidence index, hit a five-month low, however. In China, officials said industrial profits had declined in November for the first time in three years, a reminder that the growth of the world’s second-largest economy continues to slow. The exuberance was not shared in Asia, where monthly production data from Japan offered investors a reminder that the region’s growth is slowing. Stocks in Japan opened 0.8 percent lower, while shares in China and Hong Kong opened only modestly higher.
In the United States, investors had only a few new clues about the economy’s health to consider on Thursday, and the signals were mixed. Weekly jobless claims were lower, a positive sign. Expectations for job growth, as measured by the monthly consumer confidence index, hit a five-month low, however. In China, officials said industrial profits had declined in November for the first time in three years, a reminder that the growth of the world’s second-largest economy continues to slow.
Because of the partial shutdown of the federal government, a report on new home sales in the United States was delayed.Because of the partial shutdown of the federal government, a report on new home sales in the United States was delayed.
Trading volume during holiday weeks is usually lower than the rest of the year, and that means each trade can have an outsize effect on stock prices. But huge swings were taking place well before the holiday slowdown.Trading volume during holiday weeks is usually lower than the rest of the year, and that means each trade can have an outsize effect on stock prices. But huge swings were taking place well before the holiday slowdown.
[It’s not just the stock market that’s flashing warnings. The bond market is too.][It’s not just the stock market that’s flashing warnings. The bond market is too.]
Howard Silverblatt, a senior index analyst for S&P Dow Jones Indices who tracks and catalogs market performance, said stocks’ swings had been larger and more frequent this year than at any other time since 2011. On 15 days in 2018, the value of the S&P 500 changed more than 3 percent. Such a large change did not occur on a single day in 2017, and happened on only five days in 2016. In 2011, when ratings agencies downgraded United States government debt, roiling the stock market, the days on which the S&P lost or gained 3 percent numbered 24.Howard Silverblatt, a senior index analyst for S&P Dow Jones Indices who tracks and catalogs market performance, said stocks’ swings had been larger and more frequent this year than at any other time since 2011. On 15 days in 2018, the value of the S&P 500 changed more than 3 percent. Such a large change did not occur on a single day in 2017, and happened on only five days in 2016. In 2011, when ratings agencies downgraded United States government debt, roiling the stock market, the days on which the S&P lost or gained 3 percent numbered 24.
“It’s higher today than it has been for the last several years, and you can feel it,” Mr. Silverblatt said of the market’s volatility.“It’s higher today than it has been for the last several years, and you can feel it,” Mr. Silverblatt said of the market’s volatility.
[Read more about investors’ biggest concerns, and about how technology stocks fell into a bear market last week.][Read more about investors’ biggest concerns, and about how technology stocks fell into a bear market last week.]
Adding to the recent jitters are concerns about Mr. Trump’s response to the drop in stock prices. Last week, Mr. Trump used Twitter to vent his frustration over the Fed’s decision to keep raising interest rates and sought guidance from aides about whether he could fire Mr. Powell. Despite the president’s frustrations, a number of White House officials have tried to reassure investors that Mr. Powell’s job is safe.Adding to the recent jitters are concerns about Mr. Trump’s response to the drop in stock prices. Last week, Mr. Trump used Twitter to vent his frustration over the Fed’s decision to keep raising interest rates and sought guidance from aides about whether he could fire Mr. Powell. Despite the president’s frustrations, a number of White House officials have tried to reassure investors that Mr. Powell’s job is safe.
Traders have had their own concerns with Mr. Powell as well: At a news conference on Dec. 19 he used a word that is still ringing in market participants’ ears — “autopilot” — to describe the Fed’s likely approach to monetary tightening.Traders have had their own concerns with Mr. Powell as well: At a news conference on Dec. 19 he used a word that is still ringing in market participants’ ears — “autopilot” — to describe the Fed’s likely approach to monetary tightening.
This suggested to investors that the Fed might not be willing to change its plans to further raise rates and drain money from the financial system, even if market turmoil persisted. Other Federal Reserve officials quickly moved to assuage those worries after the Dec. 19 announcement, but Mr. Donabedian said he expected anxiety about the Fed’s flexibility to persist until at least the end of the next meeting of the Federal Reserve Board on Jan. 30. This suggested to investors that the Fed might not be willing to change its plans to further raise rates and drain money from the financial system, even if market turmoil persisted. Other Fed officials quickly moved to assuage those worries after the Dec. 19 announcement, but Mr. Donabedian said he expected anxiety about the Fed’s flexibility to persist until at least the end of the next meeting of the Fed board on Jan. 30.
Ultimately, he said, deep worries about the future, rather than more superficial factors like low trading volume, were behind the market tumult lately.Ultimately, he said, deep worries about the future, rather than more superficial factors like low trading volume, were behind the market tumult lately.
“There are a lot of people searching for something else, some technical factor,” he said. “I really think this is driven by rising uncertainty about the fundamentals: earnings, the economy and interest rates.”“There are a lot of people searching for something else, some technical factor,” he said. “I really think this is driven by rising uncertainty about the fundamentals: earnings, the economy and interest rates.”