Friday December 28th


Futures point to a decline for US stocks after the Dow’s record-breaking Wednesday

U.S. stock futures pointed to sharp losses on Thursday after a massive rally the day before. Dow Jones Industrial Average futures implied a drop of more than 300 points at the open as of 7:01 a.m. ET Thursday. S&P 500 and Nasdaq 100 futures also pointed to declines for the other two major indexes on Wall Street when they open. That follows the posting on Wednesday its largest single-day point gain in history, jumping 1,086.25 points, or 4.98 percent, to close at 22,878.45. The day’s gain also marked the biggest upside move on a percentage basis for the Dow since March 23, 2009, when it rose 5.8 percentage points. The also catapulted 4.96 percent — its best day since March 2009 — to finish the trading day at 2,467.70. The also had its best day since March 23, 2009, soaring 5.84 percent to close at 6,554.36. That positive momentum appeared to carry over into the Asian trading session on Thursday, with shares mostly seeing gains as Japan’s Nikkei 225 surged 3.88 percent on the day. South Korea’s Kospi closed largely flat at 2,028.44. The mainland Chinese markets, which have been closely watched as a result of Beijing’s trade war with Washington, bucked the overall positive trend to see losses on the day. The Shanghai composite fell around 0.61 percent to close at about 2,483.09 while the Shenzhen composite fell 1.216 percent to finish its trading day at approximately 1,264.23. The Shenzhen component also declined by 1.018 percent to close at about 7,215.34. Hong Kong’s Hang Seng Index also slipped about 0.4 percent, as of its final hour of trading. “Just when everyone had counted the market down, the market bounced back,” John Carey, a portfolio manager at Amundi Pioneer, told CNBC on Thursday. He described the Wednesday bounce on Wall Street as “very positive” and also “quite surprising.” “I think it has to do with valuations, we got to a point where the market had sold off about 20 percent and price-to-earnings multiples had come down on the S&P from the low 20s to 15-16 times earnings and all of a sudden people looked around and thought stocks might be a good buy,” Carey said. Furthermore, he added, there were “catalysts” for the market movement, citing reassurances from the White House that the jobs of both Federal Reserve Chairman Jerome Powell and U.S. Treasury Secretary Steven Mnuchin were safe. Still, Carey warned there remain “lots of uncertainties which could produce more volatility over the next days and weeks.” Beyond the ongoing U.S.-China trade war, which has rocked global stock markets for much of 2018, investors remain concerned over Trump’s tirade against the Federal Reserve and Powell over the central bank’s monetary policy. The U.S. government also remains in a partial shutdown as the president stands firm on his calls to obtain funding for his proposed border wall. Because U.S. exchanges were closed Tuesday for the holiday, the moves on Wall Street followed Monday’s sharp sell-off, which sent the major indexes down more than 2 percent and ended with the S&P 500 falling into a bear market. The S&P 500 was down 20.06 percent from an intraday record high set on Sept. 21 before Wednesday’s sharp rebound. Oil prices fell more than 1 percent on Thursday after rebounding 8 percent in the previous session, as worries over a glut in crude supply and concerns over a faltering global economy pressured prices even as a stock market surge offered support. Brent crude oil was down 70 cents, or 1.3 percent, at $53.77 a barrel by 0845 GMT. U.S. light crude oil was 50 cents lower at $45.72. Oil prices reached multi-year highs in early October but have fallen almost 40 percent since then and are now approaching their lowest levels for 18 months. Brent is heading for losses of almost 30 percent this year while the U.S. contract has dropped almost 25 percent. Gold rose on Thursday, trading near six-month highs hit in the previous session, supported by a weaker dollar and buyers hedging against volatile stock markets. Spot gold rose 0.64 percent at $1,275.01 per ounce as of 8:22 a.m. ET, after hitting its highest since June 19 at $1,279.06 in the previous session. U.S. gold futures rose 0.4 percent to $1,277.90 per ounce.