Published: Thu, February 15, 2018
Finance | By Loren Pratt

Wall Street dips as caution sets in ahead of inflation data

Wall Street dips as caution sets in ahead of inflation data

Wall Street's three major indexes rebounded on Monday with broad-based gains as investors regained some confidence after U.S. equities' biggest weekly drop in two years, but strategists stopped short of calling an end to the market pullback.

Energized by low stock prices coming off the more than 10 percent drop from its January high point, investors pushed the Dow to its best two-day gain - 741 points - since August 2015.

The Nasdaq composite advanced 107.47 points to 6,981.96.

However, despite the gains on Monday and a rough 1.5 percent jump on Friday, the Dow and S&P are still about six percent lower since their close on February 1.

Over the last two trading sessions, the major indexes gained about 3 percent. And as rising interest rates start to threaten overall spending by consumers and businesses, then recession fears spark a stock market sell off, which can become a crash.

Technology companies and banks, some of the biggest winners on the market over the past year, are up the most.

The 5.2% weekly decline for the S&P 500 was the worst in two years. But it's happened six times in the last seven trading days, and eight times since the January 26 peak. "So some money probably came back into the market", said John Carey, portfolio manager at Amundi Pioneer Asset Management in Boston.

Due to the panic, the Dow Jones Industrial Average dropped by 666 points before it experienced the two worst drops in its entire history. They have slumped recently after winning a big portion of the market's gains over the a year ago.

Investors said data on US consumer prices and retail sales due out on Wednesday will be key to where stocks move in the short term.

Monday's gains were spread widely through the market with 10 of the 11 S&P sectors up.

Restaurant Brands International, the owner of Burger King and Tim Hortons, jumped $3.50, or 6.2 percent, to $60.02 after a strong fourth-quarter report, and McDonald's gained $3.77, or 2.3 percent, to $164.57.

But a recent piece of good economic news - a pickup in wage growth in the United States - has unsettled investors, raising questions about what the U.S. Federal Reserve will do next.

Following Wall Street's recent swings, the S&P 500 is down 0.4 percent for the year.

"It is no surprise that Trump's agenda will provide a great deal of fiscal stimulus from tax cuts, and more spending on defense and infrastructure", Ed Yardeni, president and chief investment strategist at Yardeni Research, said Monday.

Wholesale gasoline fell 2 cents to $1.68 a gallon. The selling culminated in two 1,000-point plunges that left the Dow in a correction, a 10% decline from previous highs.

General Motors Co. lost 1.4% on the day after the auto maker said it would close an auto plant in South Korea, affecting 2,000 workers and leading to a charge of $850 million.

The Dow industrials were up 270 points, or 1.1 percent, to 24,461.

"You nearly could hear a collective sigh of relief on Friday when the market closed higher on the day - and ahead of a weekend at that", said John Stoltzfus, the chief investment strategist at Oppenheimer Asset Management, in a note on Monday.

In the commodity markets, the crude oil prices remained nearly unchanged, recovering earlier from the sharp losses of last week. Natural gas slid 3 cents to $2.55 per 1,000 cubic feet. Against the euro, the dollar is valued at $1.2344 compared to yesterday's $1.2292.

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