Dow Jones Puts Up A Fight to Rally Back from Volatile Week

It has been a very tough week for Wall Street.  Major swings in the Dow threw many into a tizzy but the other indexes did not fare well either, at least not in terms of stable changes.  In case you have not been following, here is a quick summary:

  • Wall Street had its worst Christmas Eve drop in history
  • The Dow Jones Industrial Average shot up a record 1,000 points on Wednesday
  • The market saw an astonishing rally near the close of day on Thursday

Actually, just before market close on Thursday, the Dow Jones Industrial Average posted an 865 point swing in under two hours! The blue-chip index was actually down more than 500 points on the day in mid-afternoon.

And now, Friday, US stocks are on the rise again, with gains mostly in defensive sectors like consumer staples and real estate. Still, sustained weakness throughout the tech stocks (in the NASDAQ composite) are capping the growth.

Looking more closely at the data, defensive consumer staples rose 0.81 percent while real estate grew 0.65 percent.  These led the rest of the gainers throughout the 11 major sectors of the Standard & Poor’s Index.  Volume is running lower than the day before but it looks like all three major indexes are neck-and-neck at about 0.7 percent gains on the day.

Dissecting moves in the Dow Jones, transport average slid 0.8 percent with a rally from crude oil.  West Texas International futures rose more than 1.5 percent, to $45.32 a barrel.  On the other hand, the utility average edged upward by almost 0.2 percent with US Treasury 10-year bonds and three month T-bills both down 4 basis points (to 2.73 percent and 2.37 percent, respectively).

Now, this is quite an interesting development because tech stocks had a pretty hot run earlier in the year.  While we can certainly expect the market to fluctuate—and thus a stabilizing and even slight drop in tech stocks would be inevitable—energy stocks fell 0.38 percent on the day, suggesting it may be time to exercise caution.

Obviously this is just one day; stocks could continue to fluctuate between gains and losses on market volatility alone.  But investors are always looking to buy stocks at the most attractive valuations, so this somewhat positive end-of-the-year outlook could motivate a good start to the year.

 

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