Stock markets around the world took a battering yesterday, following a dramatic sell-off on Wall Street that triggered concerns that a potentially healthy pullback from record highs could turn into a protracted bear market.
The Dow – an indexing of the stock prices of 30 major companies, including Boeing and Nike – fell 1,175 points on Monday.
And for a while Tuesday, the stock market hardly seemed like a secure place.
Banks, retailers and industrial companies also posted gains Wednesday, helping indexes claw back more of the ground they lost in steep drops Friday and Monday. The Dow and S&P are now back in positive territory for 2018. The stock market sell-off of the early 1970s had earnings growth of more than 30%. The following Monday, dubbed “Black Monday” in trading lore, the Dow closed at 260, a drop of 13.5 percent. It spiked above 50 early Tuesday. The decline was overdue, according to David J. Kostin, chief US equity strategist, at Goldman Sachs.
“I’m not quivering in my boots”, said David Buik, a market commentator for Panmure Gordon & Co., a London-based investment bank and institutional stockbroker.
Recently, good news for the economy has been viewed as a negative for stocks, as investors fear the Federal Reserve might need to hike interest rates more aggressively to cool things off. The computers can make the trades faster and more frequently than human traders can. The broad-based S&P 500 gained 0.7 percent to 2,668.43, while the tech-rich Nasdaq Composite Index climbed 0.7 percent to 7,017.87. The Dow ended the day higher by 567 points. Nasdaq-100 futures fell 79.25 points, or 1.2%, to 6,574.25.
“History suggested the S&P 500 was overdue for a pullback: 404 trading days had elapsed since the market last experienced a 5 percent drawdown, the longest stretch of time in almost 90 years!”
As Greg Valliere, chief global strategist for Horizon Investments, told CNN: “It’s a risky game to talk about the markets”.
That economic growth could be partly responsible for the stock market declines. The yield on the 10-year Treasury slipped to 2.71 percent from 2.84 percent. On Twitter, he declared that stocks would rise even higher once his $1.5 trillion tax cut was “totally understood and appreciated”.
Precious metals prices often rise when the market hits a rough patch. They recovered those losses within days.
Global markets mostly rose and appeared calmer Wednesday. Spot gold was down 1.0 percent at Dollars 1,326.51 an ounce. As a result, the biggest losses went to high-dividend companies such as utility and real estate companies whose stocks become less appealing than bonds to investors seeking income.
At close of trade, Germany’s DAX index was down 2.3 percent to 12,392.66 points, while France and the United Kingdom closed 2.4 and 2.6 percent lower, respectively. Gold, for example, was up 0.5 percent at $1,343 an ounce.
Wynn Resorts jumped $14.10, or 8.6 percent, to $177.32 after Steve Wynn resigned as chairman and CEO.
Other European markets saw similar increases which followed a rebound in Asia that had tracked Wall Street’s performance. Wynn stock has fallen 11.6 percent since the Journal’s report.
Also Wednesday, U.S. crude oil added 29 cents to $63.68 a barrel in electronic trading on the New York Mercantile Exchange.
Snapchat owner Snap soared 21 percent after it reported surging growth in users and revenue in its latest quarter. That’s true even in the US, where the Fed is gradually raising its rates. Supplies of gasoline and diesel also rose.
The Dow traded in a near-1,000 point range throughout the session. Natural gas added 1 cent to $2.76 per 1,000 cubic feet. The S&P 500 came close to the 10 percent correction threshold but did not cross into it.
In currency trading, the dollar fell to 109.02 yen from 109.54 yen late Tuesday. The euro fell to $1.2276 from $1.2392.