Stocks are off to their worst- ever start for a year
Early rally snuffed out, and stocks fall back into the dismal doldrums
The U. S. stock market — off to its worstever start to a year — saw an early rally evaporate and finished sharply lower Friday after a big late- day sell- off, dashing hopes for a market rebound despite a strong U. S. jobs report and a 2% rebound in Chinese stocks that provided a brief but short- lived respite to a turbulent, historic week of trading.
The Dow Jones industrial average closed down 168 points, or 1.0%, to 16,346, putting it more than 10% below its record close last May and back in correction territory. The blue- chip barometer had been up by almost 140 points earlier in the session.
The Dow finished the first week of trading in 2016 down 6.2%— its worst five- day kickoff to a year, according to S& P Dow Jones Indices.
The late- day flush was a “fitting end to the Dow’s worst opening week in history,” Josh Selway, analyst at Schaeffer’s Investment Research noted after the bleak week was over.
The massive sell- off this week adds up to paper losses of roughly $ 1.3 trillion for the Wilshire 5000 Total Stock Market Index, according to Wilshire.
The Standard & Poor’s 500 index tumbled 21 points, or 1.1% to close at 1922. The benchmark U. S. stock gauge fell 5.97% this week — also a record- setting dive to start the new year. The Nasdaq composite index fell 46 points, or 1.0%, to 4644, falling deeper into correction territory.
“It’s been a very rough start to 2016 for the global stock markets, and I don’t think it’s over just yet,” Paul Schatz, president of Heritage Capital, told clients in a note after Friday’s closing bell. “This bout of weakness should spill over at least into next week before even a trading low is seen. From there, we will see when and how the market tries to hammer in a low and the quality of the rally that ensues. What we are seeing is a market event rather than an economic or systemic event. Think of it as a repricing of risk.”
Stocks got a big sentiment boost before the opening bell when the government reported that the U. S. economy created 292,000 jobs in December, way above the 200,000 estimate. The early gains didn’t hold up. Job gains were also revised up 41,000 in November and 9,000 in October. The unemployment rate stayed steady at 5% in December for a third straight month.
Investors were anxious before the final trading session of the week in China after panic selling resulted in trading on the Chinese stock market being suspended on Monday and Thursday. Shares of the Shanghai composite index ended up 2.0% Friday, but still capped off the worst week for the Chinese stock market in its 25- year history. While China’s price action provided some stability early in the day, the selling resumed in the U. S. late in the day as investors opted to take risk off the table heading into the weekend.