The Morning Journal (Lorain, OH)
Wall Street ends higher with help from tech, health care
NEW YORK >> U.S. stocks couldn’t hang on to a big gain Wednesday, but they still finished broadly higher as technology and health care companies rose. That helped reverse some of the market’s big losses from the week before.
Stocks initially rallied after the Wall Street Journal reported that China’s government could make changes to its “Made in China 2025” economic development plan. That could be one step toward easing dispute between the world’s two largest economies. The Dow Jones Industrial Average surged as much as 458 points in morning trading, but gave later back much of that gain.
“Any time you get some semblance of good news on trade, you’ve had this tendency to see a pretty sharp rally,” said Liz Ann Sonders, chief investment strategist for Charles Schwab.
After taking steep losses at the end of last week, stocks have gyrated this week: on Monday they rallied to erase a big early loss, while on Tuesday a big morning gain turned into a small decline.
On Wednesday, most of the day’s gains evaporated in the afternoon. The hour-to-hour changes reflect investors’ nervousness about the health of the global economy: economic growth is expected to slow in 2019 and the U.S.-China trade dispute and rising interest rates could both make that slowdown more painful. Sonders said investors overlooked those threats for a time, but can’t ignore them anymore.
“Some of these intraday reversals have been quite extraordinary,” said Sonders. “You have to go back to the financial crisis era to see ... such a big swing on consecutive days.”
The S&P 500 index rose 14.29 points, or 0.5 percent, to 2,651.07. The Dow gained 157.03 points, or 0.6 percent, to 24,527.27. The Nasdaq composite jumped 66.48 points, or 0.9 percent, to 7,098.31. The Russell 2000 index of smaller-company stocks added 15.19 points, or 1.1 percent, to 1,455.32.
Among technology companies, chipmaker Broadcom gained 3.3 percent to $254.98. Amazon gained 1.2 percent to $1,663.54 to lead retailers, and Netflix jumped 3.6 percent to $274.88 as internet and media companies joined in the gains.
Among industrials, machinery maker Caterpillar climbed 1.7 percent to $125.37 and equipment rental company United Rentals surged 6.3 percent to $108.30 after it gave strong forecasts for 2019 and said it will start buying back stock this month.
Through the “Made in China 2025” initiative, Beijing aims to create leading companies in fields like artificial intelligence, electric cars and robotics. The Trump administration says the government is unfairly subsidizing Chinese companies and discriminating against foreign rivals. Along with disputes over China’s handling of intellectual property, it’s a significant piece of the trade tensions.
Despite Wednesday’s gains, almost half of the 500 stocks that make up the S&P 500 have fallen into a “bear market,” meaning they have dropped at least 20 percent from their most recent peaks. The S&P 500 itself is down 9.5 percent from its record high in late September. The last bear market for the index ended in March 2009.
British legislators forced a noconfidence vote in Prime Minister Theresa May, threatening an end to her tenure. She won the vote, which was revealed after the close of U.S. trading. Lawmakers within May’s Conservative Party have expressed frustrations over her negotiations of Britain’s departure from the European Union, and many of them want a cleaner break from the trading bloc. Opposition lawmakers don’t want Britain to leave the EU.
The uncertainty has knocked the British pound sharply lower in recent days, but it rose Wednesday to $1.2634 from $1.2527. The FTSE 100 stock index added 1.1 percent.
Deutsche Bank jumped after Bloomberg News reported that the German government might take steps to make it easier for the struggling bank to combine with competitor Commerzbank. U.S.-traded shares of Deutsche Bank gained 8.4 percent to $9.03, but they’re still down 52.5 percent this year and have fallen almost 80 percent over the past five years as the company reels from weak results and investments in Greek and Italian bonds that went bad.