Stocks jumped on Wednesday as global markets showed tentative signs of regaining their footing after an extended rout fueled by growth concerns.
The concern stems from the shakiness of intraday trading in recent sessions.
On Monday, the Dow plummeted more than 1,000 points before closing the day down 3.6%. In the last hour of trading we saw a 500-point swing in the Dow as the markets saw a massive selloff, pushing the S&P 500 back into corrective territory. Earlier, the blue-chip index had risen as many as 434 points.
“Only when we see that will the rallies be sustainable”. The dollar strengthened versus major peers after four days of losses. “It could end down”.
Crude oil was also a big gainer on Thursday, adding more than 5% after having slumped below $38 a barrel earlier in the week.
All of the major indexes were higher by more than 1%.
On Wednesday, the New York Stock Exchange invoked “Rule 48” for the third straight day. We’ve had a bull market for six years, and large gains in equity prices in that time.
Faith in the underlying economy seemed to carry consumer stocks like Best Buy Netflix and Michael Kors sharply higher on Tuesday.
Even if stocks end Wednesday higher, investors and traders warn the selloff is likely not over.
“We think this turmoil is temporary”.
Recent stock market problems in the Middle Kingdom hardly matter to the rest of the world – the market is small relative to its host economy.
JPMorgan cut its forecast for their year-end target for the S&P 500 to 2,150 from 2,250. That is slightly above its 10-year average of 15.7 times earnings.
It is worth reflecting on just how aggressive a 10-per-cent stock market repricing is. The Dow ended Tuesday at the lowest level since February 2014.
Mr. Dudley reiterated the position that any decision would be data-dependent. June durable-goods orders rose a revised 4.1%, more than the previously estimated 3.4% increase.
It’s a stark reminder that China’s economic well-being, or the lack thereof, can have a mighty big impact on the bottom lines of companies here in the U.S. He said he isn’t so concerned. “Eventually the reality that valuations have come off so much will come into play”.
Today, investors were in a buying mood and the Dow went up. “It’s normal to see this type of correction“, Faucher said. “This is the first year that the economy is outperforming the financial markets, it’s been the other way around for the past five years”. “This oil decline and really low energy prices is…going to be a positive for the consumer”, he said.
European stocks opened lower, tracking a late tumble in U.S. markets Tuesday that dashed hopes of a return to stability. The index gained 4.2% Tuesday and has fallen more than 8% over the past week. “We’re speaking perhaps a 10th of a proportion level of U.S. GDP in a yr”, Faucher stated of the potential impression of China’s troubles on the U.S. financial system.
So overall, the situation in markets remains as it has been: highly unsettled.
The Chinese economy is in much greater difficulty than the Chinese government has been prepared to admit to date.
China’s slowing economy does hurt U.S. corporations that export to China, and its devalued currency does make U.S. products less competitive versus Chinese products. It’s now up 2%, and on track for its biggest gain since 2011.
“Markets want to hear from China a plan on how the slowdown is going to be managed”, said Thomas Flury, head of currency strategy at UBS Wealth Management, which oversees about $2 trillion in assets. But this volatility does look like a classic correction panic, with nothing new or surprising that markets haven’t already fretted for a long time.