Wall Street bounces back following worst sell-off of year
The Dow Jones industrial average rebounded on Thursday after its worst sell-off since September as investors shifted their focus back to a solid economy and away from chaotic presidential politics.
Still, Wall Street continued to debate whether political turmoil in Washington would make it more difficult for President Trump to move forward on his economic agenda, which calls for a big tax cut for corporations and heavy spending on infrastructure.
At the close Thursday, the Dow, which fell nearly 373 points the previous day, was up 56.09 points, or 0.3%, at 20,663.02.
Instead of a second big day of selling, the stock market flashed signs of stability from the opening bell Thursday. Investors appeared to be in wait-and-see mode as it was unclear whether Trump’s woes would have a big adverse effect on the economy and investor confidence.
Investors’ anxiety level also diminished as a closely watched Wall Street “fear gauge” fell more than 6% after jumping more than 40% Wednesday.
Good news on the corporate earnings front and fresh data that showed the labor market remained strong gave investors a reason to focus on positives, said Kate Warne, investment strategist at Edward Jones. “There weren’t any new revelations to push stocks down further,” she told USA TODAY. “Investors are buying dips because ( business conditions) remain positive.“
Investors reacted negatively Wednesday after reports a memo written by former FBI director James Comey alleged Trump asked him to back off a probe of ex-national security adviser Michael Flynn. That headline was followed by news former FBI di- rector Robert Mueller was appointed to oversee the federal investigation into Russia’s alleged meddling in the November presidential election.
Nick Sargen, senior economic adviser at Fort Washington Investment Advisors, said the appointment of a “credible person” such as Mueller to lead the probe of the Trump campaign’s alleged ties to Russia reassured investors.
“I thought (Wednesday’s) market behavior was a bit severe,” said Mark Luschini, chief investment strategist at Janney. “There is no ‘smoking gun’ as yet that we know of.”