Thursday, July 18, 2024

Stocks bounce higher on Wall Street a day after big rout

by Associated Press

Stocks are opening higher on Wall Street a day after major indexes fell more than 5% for their biggest drops since mid-March. The S&P 500 rose 2.6% in the first few minutes of trading Friday, but is still on track for a weekly loss following three weeks of solid gains. Small-company stocks and bond yields rose, both signs that pessimism about the economy’s future growth was easing. The steep drops Thursday came after weeks of market experts warning that a red-hot comeback for the market since late March has been overdone. European markets also rose, but Asian markets ended broadly lower.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story is below:

Stock markets picked up on Friday after a day of losses in Asia and following Wall Street’s heavy sell-off the day before on worries over a possible second wave of coronavirus cases.

Dow and S&P 500 futures were up 2.2% and 1.9%, respectively, indicating some stabilization after the Dow on Thursday fell by almost 7%.

France’s CAC 40 in Paris rose 1.7% to 4,897, while Germany’s DAX added 0.8% to 12,067. Britain’s FTSE 100 was up 1.1% to 6,141, recovering from early losses on news that the British economy contracted by 20.4% in April, wiping out nearly two decades worth of growth.

Losses were milder in global markets than in the U.S. on Thursday, partly because markets in the region have not seen the same massive gains in recent weeks: outbreaks of the virus, travel disruptions and business shutdowns remain apparent and hopes for a quick rebound more modest.

Japan’s benchmark Nikkei 225 plunged on the open but ended down only 0.8%, at 22,305.48.

South Korea’s Kospi lost 2% to 2,132.30. Australia’s S&P/ASX 200 skidded 1.9% to 5,847.80. Hong Kong’s Hang Seng shed 0.7% to 24,301.38, while the Shanghai Composite was little changed, shedding 1 point to 2,919.74.

It is unclear if Thursday’s drop in the U.S. reflected a fundamental reassessment of the economic outlook or rather a one-off drop as traders cashed in on the markets recent gains.

“Wall Street analysts are pointing to the gap between fundamentals and valuation saying it was long overdue, and finally, the market listens,” Stephen Innes of AxiCorp said in a commentary

“Regardless of what side of the fence you are on, you must concede we are at a critical inflection point where we will have to see which channel opens up and where the next 5% move will take us,” he said.

Thursdays bout of selling came as reports showed U.S. cases climbing in nearly half the 50 states.

In Japan, daily newly confirmed cases have fallen to double-digit levels, workers are returning to work and stores are reopening. But without a strong U.S. recovery the global economy can hardly expect to pick up strongly.

“It appears that worries about a ‘second wave’ of infections have hit, with a swell in the number of cases in states like Arizona and Texas giving cause for concern,” said Riki Ogawa at Mizuho Bank’s Asia and Oceania Treasury Department, noting U.S. Treasury Secretary Steven Mnuchin has said the U.S. can’t afford another lockdown.

In other trading, benchmark U.S. crude oil rebounded, gaining 20 cents to $36.54 per barrel in electronic trading on the New York Mercantile Exchange. It fell $3.26 to settle at $36.34 a barrel on Thursday. Brent crude oil picked up 27 cents to $38.82 a barrel.

The dollar rose to 107.42 Japanese yen from 106.86 yen. The euro gained slightly to $1.1303 from $1.1294.

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