The Atlanta Journal-Constitution
Market begins year with more turbulence
Many strategists think whiplash is likely to continue.
The Wall Street roller-coaster ride resumed Wednesday as stocks plunged early, then slowly recovered.
NEW YORK — The roller-coaster ride on Wall Street resumed Wednesday, the first trading day of the new year, as stocks plunged early on, then slowly recovered and finished with a slight gain.
The Dow Jones industrial average dropped as much as 398 points in the first few minutes of trading after more shaky economic news from China. But it gradually recouped those losses, and a small rally over the last 15 minutes of trading left major indexes a bit higher than where they started.
That kind of whiplash was typical during the last three months of 2018, and many strategists think it is likely to continue.
A Chinese government survey and one by a major business magazine showed manufacturing in China weakened in December as global and domestic demand cooled. That weighed on big exporters, with tech companies like Microsoft and industrials like Boeing taking sharp losses early on, only to bounce back.
Some of last year’s worst performers, including energy and internet companies, led the gains Wednesday.
After gliding gently higher for years, propelled by rising corporate profits and extremely low interest rates from the Federal Reserve, stocks have been heaving up and down in recent months as a host of fears weigh on investors, including threats to global economic growth.
Stocks are coming off their worst year in a decade, and many Americans could be in for a shock when they open their monthly and end-of- the-year 401(k) statements.
The benchmark S&P 500 fell 6 percent in 2018, its first substantial loss since 2008, and dropped 14 percent since late September. Many other stock indexes around the world fared even worse last year.
The U.S. ec o nomy has been expanding for almost a decade, and stocks have risen steadily over that time. From September through the end of December, however, investors became more and more worried that challenges such as U.S.-China trade tensions, rising interest rates and politi- cal uncertainty could slow the economy and company prof- its, and possibly tip the U.S. economy and the global one into a recession.
Many Wall Street banks are forecasting a year of modest gains for stocks. But most also say they expect these sharp reversals to continue as investors try to handicap so many unknowns.
Vinay Pande, head of trad- ing strategies for UBS Global Wealth Management, said company earnings jumped in 2018 and are likely to keep improving.
The S&P 500 index finished with a gain of 3.18 points, or 0.1 percent, at 2,510.03, while the Dow rose 18.78 points, or 0.1 percent, to 23,346.24. The Nasdaq composite climbed 30.66 points, or 0.5 percent, to 6,665.94.
Most markets were closed Tuesday for New Year’s Day.
Prices on long-term government bonds rose, a sign investors were looking for safer options. Yield on the 10-year Treasury note fell to 2.65 percent from 2.69 percent.
After sharp losses at the start of trading, benchmark U.S. crude jumped 2.5 percent to $46.54 per barrel in New York. Brent crude, used to price international oils, rose 2.1 percent to $54.91 per barrel in London. Those gains helped boost energy stocks.
Oil prices have fallen about 40 percent since early October as investors reacted to the possibility of weaker demand for energy as economic growth slowed. That led to sharp drops in energy companies.
Julian Emanuel, ch i ef equity and derivatives strategist for BTIG, said investors often start a new year by buying shares of the companies that did the worst the year before.
Meanwhile, health care companies, the best-performing part of the market in 2018, fell Wednesday as drugmakers and insurers lost ground.