Posted on 12/26/2018 10:16:18 AM PST by Red Badger
Stocks rose sharply in volatile trading on Wednesday as surges in retail and energy shares helped Wall Street regain most of the steep losses suffered in the previous session.
The Dow Jones Industrial Average traded 550 points higher as of 12:58 p.m. ET, while the S&P 500 gained 2.6 percent. The Nasdaq Composite outperformed, rising 3.5 percent. The Dow and S&P 500 briefly turned negative earlier in the day.
Retailers were among the best performers on Wednesday, with the SPDR S&P Retail ETF (XRT) jumping 3.5 percent. Shares of Wayfair, Kohl's and Dollar General all rose at more than 5.5 percent. Data released by Mastercard SpendingPulse showed retailers were having their best holiday season in six years. Amazon's stock also jumped 5.5 percent after the company said it sold a record number of items this holiday season.
Energy stocks also jumped as U.S. crude oil prices jumped more than 7 percent. Shares of Marathon Oil and Hess were the best performers within the energy sector, jumping 7.6 percent and 6.9 percent, respectively.
"With the end of the quarter, we could get a bounce in the next few days," said Peter Cardillo, chief market economist at Spartan Capital Securities. But "the problem is [President Donald] Trump continues to create a lot of uncertainty. We can't focus on the fact there are a lot of good bargains out there."
Wednesday's moves come after the worst Christmas Eve sell-off ever on Monday, which sent the S&P 500 into a bear market. The S&P 500 was down 20.06 percent from an intraday record high set on Sept. 21. The broad index is also down 19.78 percent from its record close reached the day before. U.S. exchanges were closed Tuesday for the Christmas holiday.
The plunge in stocks on Monday came after Treasury Secretary Steven Mnuchin held calls with CEOs of major U.S. banks last weekend and issued a statement saying, "The banks all confirmed ample liquidity is available for lending to consumer and business markets."
On Monday, a senior Treasury official, who declined to be named, told CNBC that the purpose of the call and putting out the statement, was a "prudent, preemptive measure" following last week's market volatility, which saw the Dow experiencing its worst one-week plunge in a decade. Yet while the moves were intended to be reassuring, they triggered confusion among market watchers.
"This call was absolutely unnecessary and in terms of their ability to communicate to the markets, they're losing it," Frank Troise, managing director at SoHo Capital, told CNBC's "Squawk Box" on Wednesday.
Troise said the Treasury call begs the question of whether Mnuchin has "no idea what he's doing" or if "there actually is a liquidity crisis." If the latter option is the case, he questioned why it didn't come up in the Federal Reserve's recent minutes. "The concern now in the market is actually that Treasury's out of touch with what's going on," he said.
Monday's move lower also came after President Donald Trump commented on the Federal Reserve once more, calling it "the only problem our economy has" in a tweet. Trump also said Tuesday the Fed was "raising interest rates too fast because they think the economy is so good." Trump has been critical of the Fed's decisions regarding monetary policy this year. The central bank has hiked overnight rates four times this year.
This is all taking place amid an ongoing government shutdown that started last week. The Trump administration and congressional leaders are at a stalemate over funding for a wall along the U.S.-Mexico border. The administration says the wall is important for national security while opponents of the barrier note it will not solve the U.S.' immigration issues.
"Government shutdown starts with no end game strategy by either side," L. Thomas Block, Washington policy strategist at Fundstrat Global Advisors, said in a note to clients. "The President ... remains convinced that fighting for HIS wall is worth a government shutdown and his base loves the confrontation."
—CNBC's John Melloy and Michael Sheetz contributed to this report.
We are animal lovers as well as Trumpsters and stock market investors...
9 11 controlled implosion
Make that a dead free dog and it would be super funny
Nobody ever said stock market can see ACCURATELY in the future. Only God has that ability. But stock market actually does have a decent batting average in predicting future economic activity.
As for me, since I can’t see worth a damn in the future, I can only rely on historical behavior. That is why I have been posting for several moons that stock market is dangerously over-valued based on 100 year historical data. No one knows how extreme the market will reach in either direction, but eventually it tends to float towards past averages.
I would love to see Bill Maher CRASH
But compared to the rapid rise of other financial factors like college tuition, stock market isn’t over valued...
Does it feel more like 1984 right now, or 2010?
It's hard to tell. I wonder if a strong-dollar scenario works AGAINST some of these companies. I read somewhere that something like 45% of the revenue of the S&P 500 companies comes from overseas. If that's the case, then they could be showing declining revenues in U.S. dollars even if their overseas sales are UP.
Those are 2 different things and not comparable. College tuition and healthcare costs have gone up much faster than inflation because it is purely a demand and supply situation. Lots of demand because of how ridiculously easy it is to get educational loans. Students can borrow not only for tuition but also for housing and auto and travel! And who can avoid going to a doctor when really sick!
On the other hand, most corporations do have competition, both domestic and foreign, and their stock price therefore is never a monopoly and therefore has to be performance based.
Before the recent decline, stock market felt more like housing boom of 8-10 years back. It was artificial incentives (sub-prime loans) for housing boom and ZIRP for almost a decade long period for the stock market.
Strong or weak dollar can certainly affect profits of multi-nationals. Main reason Dollar is strong because Europe is still stuck on zero interest rates. And of course recent attempt by FED to normalize rates has also helped the dollar stay strong.
hah...yeah my cynicism says “meowwwwwBOING” too.
Today reality is up 1,086 points on the DOW.
The big expiration was December 21st.
I agree. Computer based programs can be a useful analysis tool but you really can’t set up an algorithm that is going to be able to predict, take into account all other non-market factors and make the right decision in its instantaneous trade. Well, there is the human brain - which was why they used to get paid the big bucks.
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