Photographs by AP/RICHARD DREW
Specialist James Denaro works on the floor of the New York Stock Exchange on Monday, when stocks rallied and the market clawed back some of its big losses from last week. The Dow Jones industrial average climbed 410 points.
Tuesday, February 13, 2018
U.S. stocks surged Monday, recovering some from the wreckage left by two weeks of trading that wiped out trillions of dollars in market value.
The Dow Jones industrial average climbed 410 points, or 1.7 percent, in trading Monday. The broader Standard & Poor's 500-stock index and the tech-heavy Nasdaq were both up about 1.5 percent. The gains were buoyed by strength in the share prices of oil and gas companies.
U.S. investors have been torn between enthusiasm for the tax cut passed by Congress last year that could provide a stimulus to an economy already at full employment, and growing fears that interest rates will jump as the federal government borrows big to cover its growing deficits.
The Dow swung more than 1,000 points, or about 4 percent Friday, capping one of the worst weeks on Wall Street since the most recent global financial crisis. Investors, who in January set a monthly record for sinking money into equity funds, pulled their money out at a record pace in the week ending Wednesday, according to EPFR, a Cambridge, Mass., firm that has tracked such data since 2000.
The S&P 500, the benchmark for many index funds, gained 36.45 points, or 1.4 percent, to 2,656. The Dow climbed 410.37 points, or 1.7 percent, to 24,601.27. It had risen as much as 574 earlier, led by big gains for Boeing and Apple.
The Nasdaq composite advanced 107.47 points to 6,981.96. The Russell 2000 index of smaller-company stocks rose 13.15 points, or 0.9 percent, to 1,490.98.
The rise in stock prices Monday is giving some investors hope that the worst may be over. After repeatedly breaking records, investors had pushed stock prices too high, and it was time for a correction, said Jack Ablin, chief investment officer at Cresset Wealth.
"The market was probably 10 to 15 percent overvalued, and we got a 10 percent correction," said Ablin, who said he moved one client into the stock market Friday.
On Monday, the Dow, comprising 30 well-known company stocks, surged with Boeing and Apple up more than 4 percent. General Electric posted a loss. All 11 sectors in the S&P pushed higher, led by energy and technology.
But some market analysts warned that Monday's quick rise in stock prices may be a sign that after more than a year of market calm, volatility but not necessarily optimism had re-emerged. Whether the recent sell-off is a short-term hiccup or the end of the longest bull market in decades is still unclear, they said.
The benchmark indexes remain far from the record highs that had dazzled investors for more than a year. The S&P has lost about 10 percent and $2.5 trillion in value since late January.
"While this feels unprecedented and feels like a massive change in investors' behavior, all we have really done is return to a more normalized market," said Todd Hawthorne, lead portfolio manager at Boston Partners.
While the markets were repeatedly marching though record high territory over the past year, even mediocre companies benefited, analysts said. That will likely not be true going forward, they said.
"So good companies with reasonable valuations will be rewarded, and companies with poor fundamentals will be punished," Hawthorne said.
The mood of traders this week could hinge on the reception of President Donald Trump's new budget plan. The plan calls for a range of spending cuts that reduce the growth of the deficit but do not attempt to balance the federal budget. Trump also unveiled a plan to spend $1.5 trillion on the country's ailing infrastructure over the next decade.
On Wednesday, traders are expected to respond to new data on inflation when the Consumer Price Index is reported.
The correction was long overdue and may last another few weeks, but there still may be room for U.S. stocks to rise another 10 percent to 15 percent before the end of the year, said Douglas Cohen, a managing director at Athena Capital Advisors. The combination of corporate tax changes and overseas economic growth should keep stocks moving higher, though likely in a more volatile environment, he said.
"My view is that the backdrop is still favorable enough," he said.
Retailers, apparel makers and other companies that focus on consumers made some of the largest gains, a sign that investors expect shoppers to keep spending and the economy to keep growing.
Benchmark U.S. crude gained 9 cents to $59.29 a barrel in New York. Brent crude, used to price international oils, lost 20 cents to $62.59 a barrel in London.
Oil prices have dropped since reaching longtime highs in late January, when U.S. crude peaked at $66 a barrel. The S&P 500 energy index is down 12.7 percent over the past month.
Twenty-First Century Fox picked up 66 cents, or 1.9 percent, to $36.40 after The Wall Street Journal reported that cable and Internet provider Comcast is still interested in buying Fox's entertainment divisions and could make another offer. Disney agreed to buy Fox's movie and television studios and some cable and international TV businesses in December for $52.4 billion.
Comcast stock fell 3 cents to $38.54 while Disney added 30 cents to $103.39.
Bond prices were little changed. The yield on the 10-year Treasury note stayed at 2.86 percent.
In other energy trading, wholesale gasoline fell 2 cents to $1.68 a gallon. Heating oil fell 2 cents to $1.84 a gallon. Natural gas slid 3 cents to $2.55 per 1,000 cubic feet.
The dollar rose to 108.67 yen from 108.53 yen. The euro rose to $1.2284 from $1.2231.
Gold rose $10.70 to $1,326.40 an ounce. Silver jumped 43 cents, or 2.7 percent, to $16.57 an ounce. Copper added 5 cents, or 1.7 percent, to $3.09 a pound.
Germany's DAX jumped 1.4 percent while the CAC 40 in France and the British FTSE 100 both advanced 1.2 percent.
Hong Kong's Hang Seng lost 0.2 percent, and Seoul's Kospi rose 0.9 percent. Markets in Japan were closed for a holiday.
Information for this article was contributed by Renae Merle of The Washington Post; and by Marley Jay of The Associated Press.
A Section on 02/13/2018
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