Wall Street pushes higher in bid to extend rally
U.S. stocks pushed higher in a choppy session on Friday following a wild week of trading that has seen equities rebound from a prolonged slide.
Major indexes moved in and out of positive territory during the day, action that was emblematic of recent volatility though lacking the huge swings of the past week.
Thursday’s trading was marked by a stunning reversal late in the session to build on a rally that started on Wednesday with the biggest single-day percentage gains for the indexes in nearly a decade.
The week started off with Wall Street’s worst-ever Christmas Eve drop, pushing the S&P 500 to within a whisker of bear market territory.
“The primary driver of today’s action continues to be this idea that markets were oversold,” said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
“The market does seem to be forming a tradeable bottom,” Arone said. “In the last few days and even including today, you are seeing investors come in and starting to look for some bargains.”
The Dow Jones Industrial Average .DJI rose 137.97 points, or 0.6 percent, to 23,276.79, the S&P 500 .SPX gained 18.35 points, or 0.74 percent, to 2,507.18 and the Nasdaq Composite .IXIC added 56.19 points, or 0.85 percent, to 6,635.68.
The S&P 500 was coming off its biggest two-day percentage gain since late August 2015 when the market was in the midst of a downturn over a slowing China. The benchmark index was set to post a weekly gain for the first time this month.
Even so, the S&P 500 was on track to drop more than 9 percent in December, its biggest monthly percentage decline since February 2009, during the throes of the financial crisis.
Concerns about trade tensions between the United States and China, instability in Washington as underscored by the federal government shutdown, and slowing U.S. corporate profit growth continue to worry investors heading into 2019.
But the recent slide in stocks means valuations are more reasonable, while some market watchers said this week that Wall Street was becoming more confident about the Federal Reserve’s approach to interest rate policy and monetary tightening.
“Investors are beginning to price in the fact that they believe the Fed will raise rates at a much slower pace in 2019,” Arone said.
The rebound in stocks this week comes as investors may be rotating into equities from bonds. U.S. fund investors added $5.2 billion to equity funds in the first net positive flows for such funds this month, while bonds funds saw $8.3 billion in outflows, according to Lipper data for the latest weekly period.
Contracts to buy previously owned homes fell unexpectedly in November, the National Association of Realtors said, the latest sign of weakness in the U.S. housing market.
In corporate news, Tesla Inc (TSLA.O) shares jumped 5.8 percent after the electric carmaker named Oracle Corp (ORCL.N) co-founder Larry Ellison to its board, in response to a demand by U.S. regulators for independent oversight of company management.
Dell Technologies Inc DELL.N returned to public markets, nearly six years after the company’s founder and chief executive, Michael Dell, took it private.
Advancing issues outnumbered declining ones on the NYSE by a 2.61-to-1 ratio; on the Nasdaq, a 2.73-to-1 ratio favored advancers.
The S&P 500 posted no new 52-week highs and no new lows; the Nasdaq Composite recorded five new highs and 71 new lows.