U.S. stocks surge at close, but end week with heavy losses

Sean Reid
February 10, 2018

USA stocks posted sharp gains on Friday, giving investors some solace after a week of huge swings that shook the market out of months of calm that saw the market rise steadily. "The average experienced two drops of more than 1,000 points and two gains of more than 400 points".

The US stock market slump continued, with the Dow Jones tumbling 587 points at 24,305 at the time of writing. Thursday's losses in the S&P 500 put the market into "correction" territory, meaning stocks had fallen 10 percent from their January 26th high.

"I don't think the market is focused on fundamentals at all", Anwiti Bahuguna, senior portfolio manager at Columbia Threadneedle Investments in Boston.

However, in late January and early February and after a 10 percent crash in the S&P 500, we are seeing a change in the narrative.

Investors remain fearful that signs of rising inflation and higher interest rates could bring an end to the bull market that has sent stocks to record high after record high in recent years.

The S&P 500 posted 1 new 52-week highs and 38 new lows; the Nasdaq Composite recorded 17 new highs and 164 new lows.

The Dow Jones Transport Average index fell 0.23 percent.

The Standard & Poor's 500 index gave up 77 points, or 2.9 percent, to 2,603.

"The market had gotten way ahead of itself", said Nancy Tengler, chief investment officer of Heartland Financial. "We are in very sloppy territory, until we're not in sloppy territory".

Technology was among the best performing groups. Brent crude, the global standard for oil prices, gave up 70 cents, or 1.1 percent, to $64.81 per barrel in London.

The Dow Jones Transport Average index was dragged down by shares of package delivery companies FedEx and United Parcel Service after a report said Amazon.com is preparing to launch a delivery service for businesses.

Equities for years have looked relatively attractive compared to the low yields offered by bonds, but the rise in Treasury yields has diminished the allure of stocks, especially with stock valuations at historically expensive levels.

Stocks rallied on Wednesday, with the Dow closing up 567 points, or 2.3%.

Analysts cited higher Treasury bond yields as the catalyst for the drop, coupled with the view that the market surged to unsustainably high levels in December and January in the euphoria over U.S. tax reform.

'And that is a process that is playing out'.

The S&P 500 jumped 1.8% to finish at 2,695.29, while the tech-rich Nasdaq Composite Index jumped 2.1% to 7,110.92.

Track the Dow live at Markets Insider.

Technology companies accounted for most of the broad gains, outweighing losses in energy stocks, which slumped as US crude prices declined. However, since the central banks of the world started completely ruining markets with zero interest rate policies and quantitative easing, stocks, as well as bonds, moved up in tandem.

"Obviously there's a lot of concerned and nervous people".

In Toronto, the materials index fell 1 per cent as gold stocks fell. The swings came one day after the steepest drop in 6 ½ years. The Iseq lost 4.1 per cent over the week.

The recent turmoil follows a prolonged period of booming stock prices with virtually no sharp declines.

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