Wednesday, 15 August, 2018

Dow jumps 200 points, rebounding from worst slump of Trump era

Dow jumps 200 points, rebounding from worst slump of Trump era Dow jumps 200 points, rebounding from worst slump of Trump era
Nellie Chapman | 01 February, 2018, 02:20

US stocks gave up earlier gains to trade flat on Wednesday after the Federal Reserve said it sees inflation rising this year, signaling it remains on track to boost interest rates again in March. The 30-stock index was also on track for its biggest two-day points drop since September 2016.

"In 2017, the USA market was up over 22 percent, as measured by the S&P 500 index without experiencing a single month when the market declined - the first time this has happened since 1958", Norman said in a one-page paper. The Nasdaq Composite added 43.36 points, or 0.59 percent, to 7,445.84. That resistance wavered Monday as drops in real-estate, utility and telecom shares proved too strong for the market to shake off. End-of-month portfolio rebalancing, anticipation over interest rates, oil prices, a too-good-to-be true earnings season - even questions over Apple's iPhone - seemed to set in at the same time. The Nasdaq also climbed around 0.1% as it also faded from early gains. Investors expect them to benefit from rising interest rates.

"They're more confident in their expectations of rising inflation", said Kevin Logan, Chief U.S. Economist at HSBC Securities in NY. The Dow transports, however, rose 0.6% as airline and trucking stocks were among the morning's top performers.

HCA bucked the trend after the hospital chain posted better fourth-quarter results than analysts had expected.

The CBOE Volatility Index, the most widely followed gauge for investors' "fears", rose to as much as 15.42, its highest level since August. A growing global economy, strong corporate earnings and a surge of consumer confidence have sent stocks soaring. The 10-year Treasury yield, which moves opposite the price, receded on Wednesday after hitting 2.73% the day before, the highest in almost four years. While bond rates remain historically low, a rapid rise above 3% could spook Wall Street.

"Investors are catching up to the fact that rates have risen", said Jonathan Mackay, investment strategist at Schroders in NY. They prevent stocks from overheating and give investors stuck on the sideline an opportunity to get in.

In economic news, consumer confidence rose to 125.4 in January as Americans expect the USA economic momentum from 2017 to carry over into the new year.

Volume so far on US exchanges was 8.1 billion shares, compared with the 7.1 billion average for the full session over the last 20 trading days.

Art Hogan, chief market strategist at B. Riley FBR said: "We've had a unilateral move higher [in stocks] to start things off and people are realising this is not sustainable".