Monday, 21 January, 2019

Wall Street Gains as Volatility Eases, Dow Jumps 200 Points

Anthony Matesic Gordon Charlo Wall Street Gains as Volatility Eases, Dow Jumps 200 Points
Nellie Chapman | 09 February, 2018, 05:00

All other Asian markets tanked, too, including the Shanghai Composite index, which closed 3.4 percent lower at 3,370.65 and Hong Kong's Hang Seng, which skidded 5.1 percent to 30,595.42. "During the selloff you got the natural reaction of bond yields going up but the moment you get some stability, yields zoom up again", Ahmed said. "Obviously people are reacting". The result is waves of selling.

The question is, was Tuesday too soon to buy back in?

A wild session on Tuesday saw the Dow Jones Industrial Average swing more than 1,100 points from peak to trough and ended with the benchmark S&P 500 tallying its best day since just before President Donald Trump's election in 2016. Boeing, Goldman Sachs and Home Depot took some of the worst losses. The blue-chip Dow Jones Industrial Average closed the session 19 points down after growing by 381 points during the trade, with the biggest change in performance since August 2015.

While days like Black Monday have occurred throughout history, they're rare and unpredictable. The major indexes are fluctuating between 4 and 6 percent declines since the beginning of the month. Its latest appearance, in my view, isn't another financial crisis.

"The stock market is throwing a tantrum", said Andres Garcia-Amaya, CEO of wealth management firm Zoe Financial.

But don't mistake being lucky for being smart.

Global stock markets have been hit by concerns about the strength of the USA economy, and its impact on inflation, prompting in turn speculation about interest rate hikes.

US stocks closed higher on Tuesday after considerable volatility. "It's hard to make the case for why we should be down more than 10% - unless we encounter negative economic news". That's a long way from bubble territory.

The market's main gauge of volatility, the Cboe Volatility Index .VIX , rose 5.73 to 33.46 on Thursday, about three times the average level of the past year.

Shortly after the opening bell, the Toronto Stock Exchange's S&P/TSX composite index rose 16.37 points, or 0.11 percent, to 15,380.3. Plus, the S&P 500 has upside potential over the next 10 years.

Tommy Kalikas

It could prompt the Federal Reserve to raise interest rates at a faster pace, which would act as a brake on the economy.

"Now they are having to shift to an environment that looks like you'll have less central bank easing, rising inflation, rising interest rates and rising volatility".

The Standard & Poor's 500 index is now up just under 1 percent for the year. I don't think so.

The Dow was down more than 1,500 points at one point on February 5, 2018.

While many neophytes may be panicking, seasoned investors and investment advisers aren't. "This is not 2008, when we were really seeing a massive broad-breadth market sell-off". And numerous best periods to invest in stocks have been when current conditions were the most unnerving. In other words, people who have invested heavily in the stock market have nothing to complain about.

Snap, the parent of Snapchat, the disappearing-message application, rose 6.69 dollars, or 47.6%, to 20.75 dollars after it reported strong user growth and greater-than-expected revenue in the fourth quarter.

More important, you avoid the temptation of trying to time the markets.

Following a solid finish in the U.S. market, Asia also put in an encouraging performance overnight in an attempt to stabilise the global sell off and paving the way for a positive start for European bourses this morning.

And remember, panic is not your friend.