Febrero 19, 2018

Markets Right Now: Stocks open higher on Wall Street

10 Febrero 2018, 04:10 | Dolorita Barahona

Markets Right Now: Stocks open higher on Wall Street

European share declines limited after Wall Street sell-off

In what's been a historically volatile week for markets, each of the major USA averages lost more than 3.7% in trading on Thursday with the Dow's 4.15% decline - which was good for a 1,032-point loss - leading markets lower. The Dow has had two 1,000-point drops this week.

As I have discussed with my clients, it is very healthy to get a 5 percent to 10 percent correction in the market, but this market has barely had a 2 percent correction in the last three years.

Bespoke Investment Group notes that both the Dow and the S&P 500 are officially in correction territory, defined as a 10% drop from recent highs, as the Dow settled at 23,860.46 and the S&P 500 closed at 2,581. After all, 2017 saw only a few bumps in the road - up until January 30, the S&P 500 index had not fallen 1 percent or more since last August.

The S&P 500 posted 1 new 52-week highs and 38 new lows; the Nasdaq Composite recorded 17 new highs and 164 new lows.

For a while Friday, it was anybody's guess whether the weeklong sell-off would ease or worsen. The broader S&P 500 fell 3.8pc, also.

The market's sudden volatility - with the Dow Jones plunging 1,000 points yesterday - is neither a reason to panic nor a sign of any weakening of the economy, analysts told the Herald.

In Toronto, the S&P/TSX composite index was down 31.08 points or 0.21 per cent to 15,034.53, after losing almost 280 points and gaining more than 45 points throughout the day.

US market indexes were lower Wednesday. They're also now all in the red for the year.

Two of the US stock market's three major indexes are in correction territory now.

U.S. crude was down 2.17% to US$60.44 a barrel. The yield on the benchmark 10-year Treasury bond was up Thursday to 2.83 percent, near a four-year high.

After huge gains in the first weeks of this year, stocks tumbled Friday after the Labor Department said workers' wages grew at a fast rate in January.

"The psychology of the market changed today".

On the commodity-heavy TSX, defensive buys into the health-care and utilities sectors helped offset losses in the influential energy and materials sectors. That makes it more expensive for companies to borrow, reduces the present-day value of companies' future cash flows, and makes bonds more competitive with stocks for investors' dollars. What is unusual is that there hasn't been a correction in the stock market since 2016. It's still up 15 percent over the past year.

Long-term investors know they need to weather storms like this periodically in order to enjoy the strong returns that the stock market has generated over time.

The pivotal gauge of S&P 500 volatility, the VIX, opened at a relatively elevated 31 points and slipped to 21.74.

"Interest rates are moving higher", NPR's John Ydstie says.

But the suddenness of the correction still caused concern among traders and investors.

The market's reversal came just as Jerome Powell took over as Federal Reserve Chairman. "In other words, the stock market tends to trend higher far more often than it's declining".

"Interest rates are rising", Hagensen said. That also sent the pound higher.

It was another topsy turvy day on Wall Street.

I can take this volatility when you know it's simply buyers and sellers working out their best guesses on the future of the United States economy, inflation, interest rates, jobs and profits, which then sees them place their "bets". The housing industry is solid, and manufacturing is rebounding. The Nasdaq was down 125 points, or 1.8 percent, to 6,651. Oil has not been below $60 a barrel since December 28. Brent crude, used to price worldwide oils, slid 94 cents, or 1.5 percent, to $63.87 in London. Natural gas fell 11 cents, or 4.2 per cent, to $2.58 per 1,000 cubic feet.

The April gold bullion contract was up US$4.40 to US$1,319.00 an ounce.

Meanwhile, the Australian dollar, one of the worst performing currencies in the offshore session, is under 78 USA cents, and below 85 yen. Britain's FTSE 100 fell 1.5 percent and the French CAC 40 lost 2 percent. Asian markets fell more sharply.

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