DUBLIN – Market volatility looks set to continue. US stocks paused in their downward march on Wednesday, but anxieties remain. Much of the recovery in stocks has been driven by falling oil prices, which are seen as positive for global growth. The slump in the US stock market is a bit of a puzzle. The US economy is doing extremely well by virtually all measures. Growth is strong, employment is strong, consumers are optimistic, and the sky looks blue. Yet, in the last few weeks, we’ve seen a stock market sell-off, rising bond yields (in other words, falling bond prices), and slumping commodity prices – classic recession indicators all. It’s not clear what’s happening. Either the market is sending an early warning of a surprise recession or sentiment has outstripped common sense by a wide margin. It’s also possible that some investors, seeing a widening gulf between the US and the rest of the world, are losing their nerve and reassessing their longer-term strategies. Only time will tell. – Felicity Duncan
Oil, Tech Stocks Help S&P Stanch Selloff
By Georgi Kantchev and Michael Wursthorn
(The Wall Street Journal) The Dow Jones Industrial Average rose more than 100 points Wednesday, halting a selloff that has left investors on edge as to whether the longest bull market ever can regain its step.
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Technology and other fast-growing stocks rebounded to help push shares higher, with Apple, Amazon.com and Google parent Alphabet all notching early-morning gains. A recovery in oil prices also helped, sending shares of Chevron and Exxon Mobil up in recent trading.
But even with Wednesday’s gains, the blue-chip index remains down 0.5% for the year, while the S&P 500 is off 0.4%, leaving both indexes at risk for their first annual losses since 2015. The technology-heavy Nasdaq Composite, which was up 1.2% Wednesday, is up just 1.3% for the year, on pace for its weakest gain in seven years.
The Dow was up 135 points, or 0.6%, to 24606 in recent trading, while the S&P 500 added 0.6%.
“It’s been a difficult year,” said Ed Campbell, senior portfolio manager at QMA, of the havoc the selloff has wreaked throughout investors’ portfolios. “All investors have goals and none of those can be fulfilled with negative returns.”
The longest bull market ever remains in jeopardy, analysts and money managers said, as a crush of concerns threaten to unravel stocks even further. Signs of slowing economic growth, which have the potential to crimp profits, have been among investors’ biggest worries as companies from Apple to Kellogg have warned of slowing sales in the final months of the year.
The continuing trade spat has only exasperated the dismay, analysts added, since billions of dollars of tariffs could curtail business activity and raise prices, while investors are increasingly fearful that the Federal Reserve could commit a misstep if it proceeds with an aggressive pace of interest-rate increases.
Some investors, however, see little evidence of a looming recession and point to still-strong corporate earnings.
“The bull market is still intact and this dip is temporary, due to some well-known concerns,” said Craig Callahan, president of investment firm Icon Advisers. “A recession is still a few years away.”
“We are not selling. We are riding through this,” he said.
UBS Global Wealth Management said in a note to clients that it has recently increased allocations to global equities in the view that the markets are already pricing in growth and trade risks.
“We view the selloff as overdone and a bull market correction, with valuations that have become more compelling,” the asset manager said.
Oil prices rebounded Wednesday after sinking deeper into a bear market Tuesday on concerns about oversupply. Brent, the international price gauge, was up 1.9% to $63.70 a barrel, after a 6.4% tumble in the previous session. Data released late Tuesday indicating a decline in U.S. crude inventories helped sentiment.
Investors also watched for the latest moves in the trade dispute between U.S. and China. The focus is now on a meeting between President Trump and President Xi Jinping, set for the end of November at the Group of 20 nations summit in Buenos Aires.
Elsewhere, the Stoxx Europe 600 added 0.7%, cutting its losses for the week to 1.2%. Markets in Asia were mixed, with Hong Kong’s Hang Seng rising 0.5% while Japan’s Nikkei Stock Average fell 0.4%.
Write to Georgi Kantchev at [email protected] and Michael Wursthorn at [email protected]
