Dow jumps 1,086 from edge of bear

NEW YORK

The Tribune (SLO) - - State - BY EMILY FLITTER The As­so­ci­ated Press con­trib­uted to this re­port.

Through­out Wall Street’s De­cem­ber melt­down, an­a­lysts have been say­ing that mar­kets were plung­ing de­spite plenty of ev­i­dence that the U.S. econ­omy re­mains strong and cor­po­rate profit growth is healthy.

That ar­gu­ment fi­nally found lis­ten­ers Wed­nes­day, when early re­ports of a strong hol­i­day-shop­ping sea­son helped lift the S&P 500 by nearly 5 per­cent, its best day since 2009. The Nas­daq added 5.8 per­cent, and the Dow Jones in­dus­trial av­er­age rose just un­der 5 per­cent. That jump, over 1,086 points, rep­re­sented the Dow’s best sin­gle-ses­sion gain ever, although a num­ber of days have eclipsed that in per­cent­age terms.

A sub­stan­tial rise in crude oil prices added to the lighter mood, as did ef­forts from the White House to ease up on crit­i­cism of the Fed­eral Re­serve.

The re­bound of­fered in­vestors a much-needed re­prieve from a de­cline that had picked up speed in De­cem­ber. Stocks had fallen for four con­sec­u­tive days through Mon­day, and the drop had pushed the S&P 500 to within just a few points of a bear mar­ket – de­fined as a 20 per­cent re­treat from its high.

Still, the S&P 500 is on pace for its worst an­nual per­for­mance since the fi­nan­cial cri­sis a decade ago and is only back to where it stood on Dec. 20. Plus, the move in prices Wed­nes­day was most likely height­ened by lighter-than-av­er­age trad­ing vol­ume dur­ing a hol­i­day week.

But to some traders, the move up­ward fi­nally made sense.

“Fun­da­men­tally you’ve got good growth here in the States, you have rea­son­able growth over­seas, you’re go­ing to have record earn­ings in 2019 and pos­si­bly in 2020 as well, you’ve got low in­fla­tion,” said Scott Wren, se­nior global eq­uity strate­gist at the Wells Fargo In­vest­ment In­sti­tute. Be­fore Wed­nes­day’s steep rise, the mar­ket had fallen too far, Wren said, and it was ready to climb thanks to the un­der­ly­ing strength of the U.S. econ­omy.

All told, ac­cord­ing to As­so­ci­ated Press re­ports, the S&P 500 in­dex rose 116.60 points, or 5 per­cent, to 2,467.70. The Dow soared 1,086.25 points, or 5 per­cent, to

22,878.45. The tech-heavy Nas­daq gained 361.44 points, or 5.8 per­cent, to 6,554.36. The Rus­sell 2000 in­dex of small­er­com­pany stocks picked up 62.89 points, or 5 per­cent, 1,329.81.

The rally was broad­based. Only one stock in the S&P 500, New­mont Min­ing, fell.

Data from Master­card showed that sales in the United States this hol­i­day sea­son grew at their fastest pace in six years, and in­vestors flocked to the re­tail sec­tor. Stock in the de­part­ment store Kohl’s jumped over 10 per­cent, and shares of Ama­zon, which called its sea­son “record-break­ing” with­out of­fer­ing fi­nan­cial de­tails, rose more than 9 per­cent.

The rally doesn’t mean that this year’s pre­cip­i­tous de­cline in stock prices is over. Signs of eco­nomic health that en­cour­aged the buy­ing are do­ing lit­tle to ad­dress one of stock in­vestors’ pri­mary con­cerns. They’re wor­ried that the Fed­eral Re­serve’s de­ci­sion to con­tinue rais­ing in­ter­est rates, even if at a slightly slower pace, will hurt the econ­omy and cor­po­rate prof­its. Higher in­ter­est rates on bonds or even sav­ings ac­counts make stock in­vest­ments less ap­peal­ing as an al­ter­na­tive.

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