After A Day of Wild Market Swings, Dow Closes 567 Points Higher

Elias Hubbard
February 9, 2018

At the closing bell, the Dow was down 1,032 points, or 4.15 percent, finishing a tough day at 23,860.

"Volatility is back", said Jamie Cox of Harris Financial Group. "That's the real story".

Technology and energy sectors took a beating, while financials and industrials helped provide some support for the key indexes. Chancellor Angela Merkel's conservative Union bloc and the center-left Social Democrats are still in talks about extending their alliance of the past four years.

Fears about inflation and soaring bond yields have sent the Dow plunging 6.5% through the first four trading days of this week.

The decline continues a market correction off an overheated January, according to market professionals. The bear attacks with both arms throwing itself down, this correlates to the market dropping over a period of time, usually a few months and longer. It is amusing, the calls I am receiving are from non-clients who are not hearing from their brokers or are just nervous with the market. "I think the fundamentals are quite strong". Germany's DAX declined 2.6 percent. The Nasdaq composite went 2.1 percent higher. S&P 500 e-minis were down 5.25 points, or 0.2 percent, with 226,163 contracts traded.

The double-digit percentage stock decline has occurred even though Wall Street stresses that the health of the economy, labor market and USA businesses remain strong.

Japan's Topix Index fell as much as 3.3 per cent before paring losses, while Australian and South Korean stocks dropped more than 1 per cent.

Adding to the angst were concerns that computer-driven trading strategies - some geared to the low market volatility of late - might have abruptly accelerated the decline. By the close of trading, the FTSE 100, which captures Britain's largest companies, had fallen 2.6 percent, Germany's DAX had tumbled 2.3 percent and France's CAC 40 had dropped 2.4 percent.

Some attribute it to enduring confusion among traders as to how to move forward.

Bond prices wobbled and turned lower.

A rout in emerging markets stocks and currencies triggered a 3.6 per cent slide in January, the worst monthly performance since 2012.

The latest sell-off is "Panic Attack #60 rather than the beginning of a bear market", he said. "We believe that these long-term fundamentals demonstrate a healthy economy".

But economic experts are cautioning investors to avoid selling. Others said that a correction in stock prices was overdue.

US stock index futures edged lower on Thursday as investors took stock of a heavy round of corporate results after the most volatile week of trading in more than two-and-a-half years. "What we have now is what I call fear of getting caught". The VIX closed up about 24 percent.

Vice President Pence shrugged off the downturn as "simply the ebb and flow" of financial markets.

Market experts said the selloff, including the overnight slide in S&P 500 futures, may have been magnified by the violent unwind of a trade betting on volatility in US stocks staying low as the CBOE Volatility index, known as the VIX, notched its biggest one-day jump on Monday in over two years.

Though a dip had been expected for a while, US losses seemed to spook global markets.

He said indications of "inflation risk on the horizon" - including higher-than-expected jobs and wage growth last week amid higher labor costs in manufacturing and non-manufacturing - was fueling the market's nose dive.

While Wall Street has been calling for a correction for some time, given the market's euphoric rise, the fall has been more violent and quicker than anticipated.

"The U.S. economy is on solid foundation", said ClearBridge's Schulze.

Investors have begun to worry that inflation might rise more quickly than expected, leading policymakers to raise rates, prompting a pull-back from stocks.

US stocks fell sharply again today. "They won't be able to provide that nice predictability and certainty that they provided ever since they started the rate hikes a few years ago".

At 12:34 p.m. ET (1734 GMT), the Dow Jones Industrial Average was down 230.59 points, or 0.9 percent, at 25,290.37, the S&P 500 was down 19.93 points, or 0.72 percent, at 2,742.20.

Other reports by Click Lancashire

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