Monday, 12 November, 2018

Dow Jones Rallies Back, Closes Higher After Huge Market Swings

An investor monitors stock prices at a brokerage house in Beijing An investor monitors stock prices at a brokerage house in Beijing
Orlando Vargas | 09 February, 2018, 05:01

The Dow Jones industrial average closed down more than 1,000 points as a weeklong market swoon continued.

Trading was volatile during the day, with the index 600 points up at its highest point and 560 points down at the lowest.

The topsy-turvy volatility of the US stock market over the past few days has left many nervous investors reaching for bottles of antacid to help settle their queasy tummies.

US stocks slipped in choppy trading on Wednesday as technology and energy stocks fell, while investors adjusted to a market with greater volatility following wild swings of the past few sessions. Hong Kong's Hang Seng slipped 0.9 percent to 30,323.20, while the Shanghai Composite lost 1.8 percent to 3,309.26 on heavy selling of banks and insurers.

The investors are yet to get out of the record one-day drop on Dow and other USA stocks.

The S&P 500 last confirmed a correction in January 2016, when it fell 13.3 percent amid concerns about a slump in oil prices. On Tuesday it rallied another $5.22, or 14.7 percent, to $40.84.

And that should lift stocks, making them a far better investment even if bond yields do drift above 3% over the next year or two.

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 surge in volatility on Monday, which sent the VIX spiking to multi-year highs in just hours, led to the implosion of products created to bet against volatility, exacerbating markets stresses in a rapid unwind.

The Nikkei index ended the day at 21,645.

How global markets tumbled

The Standard & Poor's 500, the benchmark for many index funds, is also 10 percent below the record high it set two weeks ago.

The retreat in equities had been long awaited by investors as the market climbed steadily to record high after record high with few bumps.

There is no major economic data due out Wednesday.

"While today would be crucial in seeing if the bulls can wrestle back control for Asian markets, it does appear that we have finally entered a period of increased volatility", says Jingyi Pan, market strategist at IG in Singapore. The contract dropped $1.60, or 2.5 percent, to finish at $61.79 a barrel on Wednesday. The wage pop spooked the markets because investors, already skittish as valuations were a bit steep (though not as bad as people have been saying, given strong current and expected corporate earnings), envisioned this sequence: wage growth gooses price growth (i.e., inflation), which raises both market and Federal Reserve interest rates, which slows growth and shaves corporate profit margins.

Tom Martin, senior portfolio manager with Globalt Investments, said he did not see anything specific moving the market lower, just a continuation of a shift in investor mindset from fear of missing out in a rising market to worry of clocking big losses in a market that has turned.

The broad-based S&P 500 shed 0.2 per cent to 2,676.46, while the tech-rich Nasdaq Composite Index edged up less than 0.1 per cent to 7,054.61. The 10-year Treasury yield, which moves opposite price, spiked to a four-year high of 2.85% on Friday.

The biggest losses went to high-dividend companies including utility and real estate companies, as bond yields increased after a sharp drop on Monday.

USA crude oil fell 76 cents, or 1.2 percent, to close at $63.39 a barrel in NY. Late Friday the Fed said it will freeze Wells Fargo's assets at the level where they stood at the end of previous year until it can demonstrate improved internal controls. It fell 76 cents, or 1.2 percent, to close at $63.39 a barrel in New York Tuesday.

The Russell 2000 is down 27.54 points, or 1.8 per cent.

GTA 5 Has Sold More Than 90 Million Copies
As we discussed on the Press X To Podcast several weeks back, it is no surprise Grand Theft Auto V sales have been fantastic. Between GTA Online and National Basketball Association 2K18, Take-Two observed new heights for "recurrent consumer spending".


(NASDAQ:ATVI) Position Boosted by Traynor Capital Management Inc
For example, a stock may near its 52 week low in a price correction after earnings expectations for future quarters were revised. Eulav Asset Mgmt stated it has 1.48% in Activision Blizzard, Inc . (NYSE:GWW) on Monday, August 31 with "Buy" rating.


China's imports surge in January
Still, analysts worry the persisting deficit will compound sensitive trade relations between the two countries. China's trade surplus with the U.S. dropped from $25.6 billion in December to $21.9 billion last month.


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