Bulls’ last hurrah?
> Doubts emerge after latest US stocks plunge
NEW YORK: Wall Street stocks experienced another rocky session on Tuesday, with technology shares especially volatile, as worries about higher interest rates and trade conflict threatened the multi-year bull market.
After a second straight battering, the Nasdaq was alone among the three major indices to cling to a modest gain for 2018, while both the Dow Jones Industrial Average and the S&P 500 slipped into the red for the year.
The latest bout of weakness followed an acrimonious weekend Asia-Pacific Economic Cooperation summit that showcased continuing US-China tensions over trade just days before Presidents Donald Trump and Xi Jinping are set to meet during a Group of 20 summit in Argentina.
Investors are also edgy over the prospects the Federal Reserve (Fed) could continue to increase interest rates even in the face of the stock market’s weakness. While analysts generally accept the Fed’s plan to lift rates again in December in light of strong US jobs and consumer sentiment data, many fear further increases in 2019 could hasten the stock market’s fall.
Trump himself has repeatedly said the Fed should take a more accommodative stance on monetary policy and even called on the US central bank to cut rates in remarks to reporters Tuesday afternoon at the White House.
The S&P 500 in August marked the longest-ever bull market, a landmark that has led to discussion of “late-cycle” gains on Wall Street.
“The odds are increasing that, if the Fed continues to raise rates and tighten, the bull market could end in 2019,” said Matt Miskin, an analyst at John Hancock.
US stocks spent the entire session on Tuesday in the red, with the Dow ending down 2.2% at 24,465.64, a drop of more than 550 points and more than 250 points below its year-end level of 2017.
The broad-based S&P 500 shed 1.8% to 2,641.89, while the tech-rich Nasdaq Composite Index lost 1.7% at 6,908.82.
The losses came on the heels of a dreary session on Monday that saw all three major indices shed at least 1.5%.
TD Ameritrade’s Shawn Cruz said this week’s pullback had been exacerbated by low trading volumes due to limited staffing ahead of the Thanksgiving holiday today. Cruz predicted stocks could steady after the holiday passes.
“This is usually where we start to see sellers get exhausted,” Cruz said of current stock prices.
Market watchers say political uncertainty resulting from the recent midterm congressional elections in which Trump’s party lost control of the lower branch of Congress is not a prime factor in the latest bout of weakness. – AFP