MARKET SNAPSHOT: Dow Futures Show 100-point Bounce After 800-point Plunge
December 05 2018 - 10:26AM
Dow Jones News
By Mark DeCambre, MarketWatch
Regular trading on Wall Street is closed in observance of a day
of mourning for George H.W. Bush but stock-index electronic trading
remains open
U.S. stock-index futures were showing modest gains early
Wednesday, following ugly losses of at least 3% for the three main
indexes in the previous session. Although, the market is closed
(http://www.marketwatch.com/story/what-george-hw-bushs-funeral-means-for-stock-market-bond-traders-commodities-2018-12-03)
as the nation mourns former President George H.W. Bush, who died
Friday at 94, electronic trading of stock-index futures is still
taking place.
How did the benchmarks fare?
Futures for the Dow Jones Industrial Average were up 114 points,
or 0.5%, at 25,160, those for the S&P 500 index were up 16.30
points to reach 2,718, a gain of 0.6%, while the Nasdaq-100 climbed
45 points, or 0.7%, at 6,848.25.
On Tuesday, the Dow sank 799.36 points, or 3.1%, to 25,027.07,
while the S&P 500 index dropped 90.31 points, or 3.2%, to
2,700.06. The Nasdaq Composite Index tumbled 283.09 points, or
3.8%, to 7,158.43.
The financial and industrial sectors were the biggest losers
while utilities were the sole gainer in the S&P 500. All three
benchmarks had their worst day since Oct. 10.
Read:Here are the worst-performing stocks on 'Tariff Man'
Tuesday
(http://www.marketwatch.com/story/here-are-the-worst-performing-stocks-on-tariff-man-tuesday-2018-12-04)
What drove the market?
A session bereft of regular-session trading of bonds and stocks,
may provide investors some respite after a combination of doubts
surrounding the U.S.- China's weekend trade moratorium at the G-20
summit and ominous developments in the bond market combined to
shake investors' mettle.
On Monday, the yield on five-year government debt slid below
(https://www.bloomberg.com/news/articles/2018-12-03/the-flattening-yield-curve-just-produced-its-first-inversion?srnd=premium-europe)
the yield on three-year debt, a phenomenon which has preceded
previous recessions, and is a sign that investors are more
confident about current than future economic growth as the Federal
Reserve raises rates.
On Tuesday, a widely followed spread between the two-year yield
and the 10-year rate tightened to its narrowest in 11 years
(http://www.marketwatch.com/story/10-year-yield-extends-fall-below-3-as-trade-in-government-debt-raises-concerns-2018-12-04).
This differential between the maturities is the most popular gauge
of future economic growth. The 10-year yield falling below the
two-year has predicted every recession since 1975.
Some analysts and investors believe that the severity of
Tuesday's decline, which took hold midday, demonstrated some signs
of capitulation, where investors finally throw in the towel after
attempting to withstand a nagging downturn.
Read: December historically is the most wonderful time of the
year for stocks
(http://www.marketwatch.com/story/december-historically-is-the-most-wonderful-time-of-the-year-for-stocks-2018-12-03)
What were analysts saying?
"A couple key points, as yesterday's selloff caught many,
including myself, off-guard. After a 6% move in six trading days
higher for [S&P 500], we erased nearly half of this yesterday.
The positives revolve around momentum being positively sloped on
daily charts, DESPITE yesterday's decline," wrote Mark Newton
independent analyst at Newton Advisors, in a Wednesday note.
"Additionally, we saw the first instance of some capitulation in
volume with heavy volume on the downside vs upside which has been
sorely lacking for months," he wrote.
What data are ahead?
The Federal Reserve's Beige Book, representing an anecdotal
account of business conditions in all of the central bank's
districts, is scheduled to be released at 2 p.m. Eastern Time. It
is the only piece of data scheduled to roll out Wednesday, with all
others previously scheduled for the day postponed until Thursday in
observance of the national day of mourning.
Check out:George H.W. Bush funeral -- live blog and video
(http://www.marketwatch.com/story/george-hw-bush-funeral-live-blog-and-video-2018-12-05)
Read:Here's the schedule for the George H.W. Bush state funeral
(http://www.marketwatch.com/story/heres-the-schedule-for-the-george-hw-bush-state-funeral-2018-12-05)
(END) Dow Jones Newswires
December 05, 2018 10:11 ET (15:11 GMT)
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