U.S. Stocks Jump, Erasing Some Recent Losses
October 16 2018 - 12:35PM
Dow Jones News
By David Hodari and David Hodari
U.S. stocks soared Tuesday as a broad rally across all 11
sectors of the S&P 500 helped erase losses from the start of
the week.
The Dow Jones Industrial Average jumped 370 points, or 1.4%, to
25614 a day after posting its sixth loss in eight trading sessions,
while the S&P 500 added 1.5% and the Nasdaq Composite climbed
1.9%.
Shares of fast-growing companies have oscillated between large
gains and losses over the past month as investors increasingly
questioned whether the rally in the group had been overdone.
That has contributed in turn to rising volatility in broader
stock indexes.
Investors will likely watch closely the trajectory of the
technology sector and other so-called growth trades, as well as the
ramifications of rising bond yields and shaky global trade
relations, analysts say.
After months of relatively calm trading, investors received "a
dose of reality," said Dave Donabedian, chief investment officer at
CIBC Atlantic Trust Private Wealth Management. Moving forward, "we
do think we'll have more periods where Fed and interest-rate
worries take precedence and put downward pressure on the
market."
Shares of fast-growing companies that tumbled at the start of
the week rallied on Tuesday, helping lead the bounce higher in
major indexes.
Facebook rose 2.3%, while Alphabet added 2.5% and Microsoft
climbed 2.8%.
Meanwhile, the latest stream of corporate earnings results drove
swings in the financial sector.
Goldman Sachs Group stock rose 1.6% after reporting its
third-quarter profit jumped thanks to strong deal making and lower
taxes, while Morgan Stanley added 4.3% after gains across its
wealth management, trading and investment banking businesses
contributed to better-than-expected earnings.
Elsewhere, the Stoxx Europe 600 climbed 1.6%, boosted by gains
in Italian shares.
Italy's populist-led government is sticking to a deficit target
that will bring it into conflict with the European Union, but Prime
Minister Giuseppe Conte on Tuesday declared the country's
membership in the EU as "unrenounceable."
That remark should assuage investors outside Europe worried that
Italy could attempt to pull out of the EU, said Edmund Shing,
global head of equity-derivative strategy at BNP Paribas. "People
are looking around to see whether markets are stabilizing," he
said.
Trading was more mixed in Asia. While Japan's Nikkei Stock
Average closed 1.3% higher -- paring most of its drop Monday --
Chinese stocks took a fresh hit, with the Shanghai Composite down
0.9% and the Shenzhen A Share down 1.9% amid fresh fears about
growth.
The decline in Chinese stocks came on a day of poor economic
data for the country, with auto and Golden Week real-estate sales
sharply lower. Golden Week is a weeklong holiday in early October
that is usually an important time for big-ticket purchases such as
real estate.
Write to David Hodari at David.Hodari@dowjones.com
(END) Dow Jones Newswires
October 16, 2018 12:20 ET (16:20 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.