Febrero 19, 2018

US, European stocks up sharply, oil prices fall

09 Febrero 2018, 08:35 | Dolorita Barahona

Markets Right Now Asian markets track plunge on Wall Street

Markets Right Now Asian markets track plunge on Wall Street

The Dow plummeted more than 1,000 points - the second time this week it fell more than four figures - confirming many analysts' predictions stocks would remain volatile as the market tries to rebound from a historic, ongoing sell-off.

Many are bracing for more wild swings ahead as the Cboe Volatility index is holding at twice its level from a week ago.

Hitting those support levels would represent an 11% correction for the S&P and a 15% selloff for the Dow from their January 26 all-time highs.

Here's what's driving the volatility.

"The economy clearly can handle gradually rising interest rates", he told reporters afterwards. Unemployment is historically low, and there are more open jobs than people to fill them.

While that's good news for workers, it has sparked concerns about inflation. Businesses will eventually have to raise prices on the stuff they sell to afford their growing payrolls. Friday's report showed wages grew at a faster pace in January, and investors anxious that that means inflation is speeding up, and that the Federal Reserve will have to raise interest rates faster than previously expected in order to keep that inflation in check.

The Fed planned on raising interest rates slowly this year - just three times in 2018.

Experts expect more ups and downs to come. In fact, more than $100 billion flowed into stocks globally at the beginning of 2018, according to Bank of America/Merrill Lynch data. Investors remain fearful that signs of rising inflation and higher interest rates could bring an end to the bull market that has sent stocks to record high after record high in recent years.

The move lower will provide investors with cheaper stock valuations that are closer to historical norms and will be constructive for the market in the long term, Kenny said.

Earlier European shares closed up 2.0 percent, snapping a seven-day losing streak, while a world stock index was up slightly.

Hanesbrands, which makes underwear, T-shirts and socks, reported a smaller profit than investors expected, and its forecast for the current year didn't live up to analysts' estimates either.

Stocks have also been on a tear because they have been one of the only investments with a decent return. A 3 per cent yield is looked upon by investors as a motive for people to flee the risk of stocks for the relative safety of bonds. That's less true for China, whose financial markets are more cloistered from global investors. "It seemed to me more machine-driven and not really capitulation-driven, so again I think more time is required before the ultimate shakeout is all said and done".

On Tuesday, Wall Street staged a dramatic turnaround. A supply glut could devalue bonds.

By Wednesday, Asian shares have reversed its previous movement following the move of most US investors to safe-haven assets due to expectations of a jittery market head of the week.

Inflation is bad for bonds, too.

"The tax cut euphoria drove stocks up at an unsustainable pace", Scott Minerd, global chief investment officer at Guggenheim Partners, wrote in a research note.

Stocks shuttled between positive and negative territory throughout the day, their activity spanning more than 1,000 points. He said the loss represented a 4.5 percent decline in the market.

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