Tags: dow | stock | market | s&p

Dow Swings 1,000 Points, Finishes More Than 2% Higher

Dow Swings 1,000 Points, Finishes More Than 2% Higher
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Tuesday, 06 February 2018 04:02 PM EST

After big moves higher and lower, U.S. stocks are surging Tuesday afternoon, raising hopes for an end to a global sell-off. The sharp swings came one day after the steepest drop on Wall Street in 6 ½ years.

Major indexes in Asia and Europe fell following Monday's 1,175-point drop in the Dow Jones industrial average. Investors remain fearful that signs of rising inflation and higher interest rates could bring an end to the bull market that has sent stocks to record high after record high in recent years.

The Dow Jones industrial average jumped as much as 510 points. It was up 345 points, or 1.4 percent, at 24,694 as of 3:23 p.m. The Standard & Poor's 500 index, a broader market barometer that many index funds track, climbed 25 points, or 1 percent, to 2,674. The Nasdaq composite rose 91 points, or 1.3 percent, to 7,058.

The steep drops Friday and Monday wiped out the gains the Dow and S&P 500 made since the beginning of the year, but both remain higher over the past 12 months. The Dow is up 23 percent over that time, the S&P 500 17 percent.

Trading has been turbulent all day. Within the first half-hour of trading, the Dow Jones industrial average fell as much as 567 points and then jumped as much as 367 points. It's switched between gains and losses several times since then.

The S&P 500 fell 6 percent Friday and Monday, and it's down 6.6 percent from the recent record high it set on January 26. That's less than the 10 percent drop that is known on Wall Street as a "correction."

Corrections are seen as entirely normal during bull markets, and even helpful in curbing excessive gains and allowing new investors to buy into the market at lower prices. It has been an uncommonly long time since the last market correction, which ended almost two years ago. That meant Tuesday was likely to be one of the most watched days on the markets in years.

Despite the big swings, Tuesday's trading looked similar to the patterns that have shaped the market for the last year: investors bought retailers like Amazon and Home Depot and technology and industrial companies and banks, which do better when economic growth is strong.

Travel bookings site TripAdvisor was one of only two S&P 500 companies that finished higher on Monday. On Tuesday it rallied another $5.57, or 15.6 percent, to $41.19.

The biggest losses went to high-dividend companies including utility and real estate companies, as bond yields increased after a sharp drop on Monday. The yield on the 10-year Treasury note rose to 2.78 percent from 2.71 percent. Higher Treasury yields make high-dividend stocks like utilities less appealing to investors seeking income.

The market mood turned decidedly fearful the last two days. Friday's U.S. jobs report showed wages grew at a faster pace in January, and investors worried that that means inflation is speeding up, and that the Federal Reserve will have to raise interest rates faster than previously expected in order to keep that inflation in check. Higher rates act like a brake on the economy by slowing down borrowing and lending.

Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management, said the plunge wasn't caused by inflation fears alone. The markets have been unusually calm since late 2016, and he said investors were betting that would continue.

"People were positioned for more central bank easing or continued central bank easing, low rates, and importantly, low volatility," he said. "Corrections are caused by people having to reposition for new environments."

Schutte added that corrections can end quickly, and they often do so when investors see evidence of continued economic growth. Experts do think the global economy will keep growing this year even though that is likely to bring more inflation. Schutte said that as central banks stop propping up the market, trading will probably be more volatile in the next few years.

U.S. crude oil fell 76 cents, or 1.2 percent, to close at $63.39 a barrel in New York. Brent crude, the benchmark for international oil prices, lost 76 cents, or 1.1 percent, to $66.86 a barrel in London.

Wholesale gasoline lost 4 cents to $1.81 a gallon. Heating oil dipped 3 cents to $1.99 a gallon. Natural gas added 1 cent to $2.76 per 1,000 cubic feet.

Investors often buy gold when they're worried about market volatility, but they aren't doing that now. Gold fell $7, or 0.5 percent, to $1,329.50 an ounce and silver dipped 9 cents, or 0.5 percent, to $16.58 an ounce.

Among the biggest losers Tuesday was Tokyo's Nikkei 225 stock average, which ended 4.7 percent lower. Hong Kong's Hang Seng skidded 5.1 percent and South Korea's Kospi declined 1.5 percent.

In Europe, Germany's DAX fell 2.3 percent and the CAC 40 in France lost 2.3 percent. The British FTSE 100 index fell 2.6 percent.

In other commodities trading, copper fell 3 cents to $3.19 a pound.

The dollar fell to 109.12 yen from 109.70 yen. The euro dipped to $1.2394 from $1.2399.

On Monday, the Dow finished down 4.6 percent while the S&P 500 sank 4.1 percent. The last fall of that size came in August 2011 when investors were fretting over Europe's debt crisis and the debt ceiling impasse in Washington that prompted a U.S. credit rating downgrade.

© Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


StreetTalk
Major indexes swung up and down after starting the session 2 percent lower, underscoring a return of volatility to a market that until recently had been known for the absence of such major shifts.
dow, stock, market, s&p
895
2018-02-06
Tuesday, 06 February 2018 04:02 PM
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