Published: Sun, February 11, 2018
Business | By Max Garcia

Wall St ends whipsaw week on upbeat note

Wall St ends whipsaw week on upbeat note

A late-afternoon rally reversed steep losses for U.S.

Many are bracing for more wild swings ahead as the Cboe Volatility index is holding at twice its level from a week ago.

U.S. Treasury prices gained after renewed weakness in equity markets increased demand for the low risk debt, while oil prices sold off more than 3 percent. "Since the financial crisis, this is the first 10 percent correction in stocks that has not been accompanied by a significant fall in rates". The Dow and S&P had lost 10 and 12 percent of its value by Thursday, while the Nasdaq had lost 9.7 percent. But the plunge has left the S&P 500 "extremely oversold", according to Bespoke Investment Group.

With Wall Street's quarterly earnings season more than half-way through, about three-fourths of the S&P 500 companies that have reported so far have beaten profit expectations, above the 72 percent beat-rate in the past four quarters.

For a while Friday, it was anybody's guess whether the weeklong sell-off would ease or worsen.

Of those corrections, only two have turned into bear markets, which is a more severe and more sustained downturn in the market, when stocks drop by at least 20 per cent.

Most notably, the Dow Jones Industrial Average, an index of 30 leading USA shares, suffered two days of 1,000-point-plus declines.

Washington D.C, February 09: US stock markets continue its decline and US Dow Jones has plunged more than 1,000 points for the second time this week.

"Corrections are generally temporary price declines interrupting an uptrend in the market or an asset". The S&P 500 was up 14 points (0.6%), and the Nasdaq was up 41 points (0.6%). During the day, the Dow had fallen as much as 1,600 points.

The Nasdaq dropped 274 points at 6,777.

For the week, the Dow is down by about 5.2 percent. They're also now all in the red for the year. The U.S. Senate reached a bipartisan deal Wednesday that would boost spending limits by $300 billion over the next two years. Energy.SPNY was the lone major S&P sector to end negative as oil prices tumbled. The yield on the 10-year Treasury rose to 2.86 percent from 2.83 percent late Thursday.

According to Time, stocks started the tumble on Friday, when the Labor Department stated that workers' wages went up quite fast for the month of January.

Investors fear that low unemployment, increasing US growth and rising wages will spur the Federal Reserve to raise interest rates, which would boost the cost of borrowing money. That amount exceeds the gross domestic production of the United Kingdom and Canada combined.

The market, now in its second-longest bull run of all time, had not seen a correction for two years, an unusually long time. That means they are in what is known on Wall Street as a "correction", their first in nearly two years.

Still, some remain unperturbed by the recent stock market rout, noting that investors are simply rebalancing their portfolios as markets grow more choppy.

Analysts warned that stocks had become too expensive.

Often, the best days for the stock market follow big drops. Investors are also facing the prospect of Fed tightening, which could cool growth. And it takes an average of just over another two years for the market to recover its lost ground.

The economy is already running hot, with the nation's unemployment rate at a 17-year low of 4.1 percent. That also sent the pound higher. The housing industry is solid.

Concerns about higher bond yields and interest rates spurred recent selling of equities, disrupting an extended advance in stocks, though the retreat in the market had been long awaited by investors.

The percentage decline on Thursday, 4.2%, wasn't almost as bad as the scary days of the 2008 financial crisis. Oil has not been below $60 a barrel since December 28. The Dow dropped from a January 26 peak of 26,567, closing at 23,860 - a plunge of 10.8 percent.

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