Wall Street suffered a new turnaround of the moods, as first investors used Wednesday high prices to redeem their profits, but then stock markets managed to recover the dips.
After Wednesday’s rally, the investors wanted to cash out, causing a decrease in main indexes.
On Christmas Eve, the blue-chip index Dow Jones Industrial Average ended the session with a sharp decline of almost 3%, but on Wednesday the benchmark added nearly 5% to its value, leaving most stock observers without adequate comment on what is happening.
According to some analysts, the extreme volatility is fueled by Washington’s surprising political decisions as well as by programmed trade. Traders also blame the low trading volume for the price fluctuations.
In contrast, the announcement of new economic data had a modest effect on stock quotes. As announced by the Conference Board for Market Research, the American consumer confidence declined surprisingly in December. The consumer confidence index dropped to 128.1 points from 136.4 points in November and the consensus forecast for an index of 133.7 points. This is the lowest level of consumer confidence since July, and only two months earlier (in October) consumer attitudes reached the highest level since September 2000.
Meanwhile, it becomes clear that the number of Americans who have applied for unemployment benefits has dropped slightly last week, giving a signal to the labour market. The indicator seems to stabilize after growth in recent months. The new applications have fallen by 1,000 to 216,000, taking seasonal factors into account during the week to December 22.
And even though investors were not surprised by the fact that major stock indices fell again, Dow Jones Industrial Average reported growth in only seven of the 17 trading days in December – a proof of serious volatility.
Dow wiped out more than 1,800 points during the four trading days on Christmas Eve but recovered a little after the weekend.
However, the index Dow Jones Industrial Average added 189 points, or 0.8%, to 23,068 points on Thursday after falling by 611 points earlier in the session. S&P 500 rose by 0.6% and Nasdaq Composite grew by 0.2%.
Among the individual shares, Amazon stocks were the biggest losers. They lost 0.63% of their value. The brokers point out that India, one of the world’s fastest-growing online markets, has tightened its legislation for foreign internet marketers like Amazon.
Visa’s stock added 1% on Thursday. The credit card company plans to acquire British supplier of financial services Earthport, offering 30 pence per share. The British company ended the session in London with a price increase of almost 280%.
Among the S&P 500 leaders were Freeport-McMoran and Avery Dennison, with growth rates of 2.6% and 2.5%. Dow leaders were 3M, Procter & Gamble and the IBM. On the other side were Advanced Micro Devices (AMD) and Nvidia, which shares declined after RBC report highlighted their doubts about video card prices.
The investors continue to face many of the same issues that negatively affect the stocks since October: the Fed’s intention to tighten monetary policy, as well as the ongoing US-China trade war and the slowdown in economic growth.
Fed Chairman Jerome Powell’s fate, as well as the closure of government agencies that entered his sixth day, have only increased the concerns of investors.
While a number of companies, including Facebook and Amazon.com, reported a growth slowdown in the third quarter, the investors are wondering if this is a precursor to a wider economic downturn sparkling stock sellouts.
The S&P 500 wiped out more than 2 trillion USD since September 20. The loss accelerated in December, making the last month of the year worst for the S&P 500 since 2008.
The damage is large: all 11 sectors reported declines at the end of the year.