Wall Street bounces after another volatile day, global markets stabilize

Angelica Greene
February 11, 2018

In what's been a historically volatile week for markets, each of the major USA averages lost more than 3.7% in trading on Thursday with the Dow's 4.15% decline - which was good for a 1,032-point loss - leading markets lower.

That came at the end of a day of heavy trading and huge swings for the market.

The sell-off pushed the Dow and S&P 500 into correction territory, when stocks fall at least 10% from their highs.

The Dow Jones Industrial Average dropped by 1,032 points on Thursday, or 4.15 percent, closing at 23,860.46. After numerous turns higher and lower, it wound up with a gain, coincidentally, of 567.

On Wall Street, many companies that rose the most over the a year ago have borne the brunt of the selling. But both Democratic liberals and GOP tea party forces were fighting the plan, raising questions about its chances just a day before the latest government shutdown deadline.

Coupe said the volatility is rising because investors are undecided whether stocks or bonds are the better bet at the moment. The Nasdaq Composite was down 274 points, or 3.9%, at 6,777.

It was another shaky day on Wall Street as indexes rallied in the morning then sank in the last few minutes of trading.

As we noted Wednesday, however, tech stocks fell more than the broader market and some analysts have pointed to these market leaders - Alphabet (GOOGL), Facebook (FB), Microsoft (MSFT), Amazon (AMZN), and Apple (AAPL) - as potential indicators of markets having not yet worked out all the stress inflicted in the 8% S&P 500 decline that happened in just a handful of trading days.

The Dow recovered some of its early plunge and was down 127 points, or 0.4 percent, at 24,255.

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US share values have also climbed further since President Donald Trump's election on the prospect of tax cuts, corporate deregulation and infrastructure spending, and the S&P 500 is still up 23.8 percent since his victory.

"Know what you own, why you own it and not have more than a 4 to 5 percent concentration in any one stock because you expose yourself to undue risk", he said.

Citro said corrections in the stock market are a part of investing, and he urges clients to keep their eyes on the long-term outlook for stocks, which have historically been a solid investment. "There was euphoria because there hadn't been a pullback", said Jeffrey Schulze, investment strategist at ClearBridge Investments. Stocks rebounded after investors "focused again on a strong economy and robust profits", he said. "People will be afraid now of shorting volatility". The tumult started last Friday as investors anxious about signs of rising inflation. It could prompt the Federal Reserve to raise interest rates at a faster pace, which would act as a brake on the economy. They also experienced corrections.

Travel bookings site TripAdvisor was one of only two S&P 500 companies that finished higher on Monday.

Asked why the Dow, which also cratered 666 points Friday, gyrated so wildly, Axel Merk, chief investment officer at San Francisco-based Merk Investments, said: "When stocks reach new highs month after month, when a virtual currency is the hottest thing in town, greed has overtaken fear". Benchmark U.S. crude lost 21 cents to $61.58 per barrel in electronic trading on the New York Mercantile Exchange. The TSX is down 8.2 per cent from its all-time high of 16,412.94, set on January 4. Heating oil dipped 3 cents to $1.99 a gallon. On the Nasdaq, 1,596 issues rose and 1,056 fell.

Investors often buy gold when they're anxious about market volatility, but they aren't doing that now.

In Toronto, the S&P/TSX composite index was down 264.97 points, or 1.73 per cent, to 15,065.61, in a broad-based decline.

Asia's biggest market - Japan's Nikkei 225 Index - lost 4.7 per cent, while Hong Kong's Hang Seng plunged over five per cent.

In South Korea the Kospi, which saw only modest losses on Tuesday, fell back to close 2.3 percent lower at 2,396.53 as investors fretted over whether the U.S. Federal Reserve will tighten monetary policy.

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