The Dow Jones Industrial Average erased a 414-point surge on Friday as Wall Street’s attempt to rebound from this week’s drop failed.
The 30-stock index traded just below breakeven as shares of J.P. Morgan Chase and Boeing pulled back. The S&P 500 also traded well off its session high. As of 12:44 p.m. ET, it was up just 0.2 percent after surging more than 1 percent. The Nasdaq Composite also pared most of its gains, trading 0.7 percent after jumping more than 2 percent.
“I don’t see evidence of what you’d like to see in a bottom,” said Willie Delwiche, investment strategist at Baird. He noted markets tend to bottom after more signs of capitulation and widespread panic, which we haven’t seen thus far.
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Gains in tech shares like Netflix and Amazon initially led the major indexes to sharp gains. The initial move higher on U.S. stocks followed an uptick in global equities. The Shanghai Composite surging 0.9 percent and Japan’s Nikkei 225 gaining 0.5 percent. European equities also rose initially before closing lower on the day.
Wasif Latif, head of global multi-assets at USAA, said investors should remain cautious in the near term. “It’s too early to tell if we’re out of the woods yet,” he said. “We have to wait and see how the market reacts in the next few days.”
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On Thursday, Wall Street closed sharply down, with the Dow falling over 540 points, bringing its two-day losses to more than 1,300 points. Sentiment was rocked around the globe in recent sessions, as investors grew nervous over the rise in interest rates and high valuations in tech shares.
President Donald Trump has recently criticized the U.S. Federal Reserve for the decline in stock markets, saying Wednesday that he wasn’t happy with how the central bank continued to raise interest rates.
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Stocks have also fallen this week as tech — the biggest S&P 500 sector by market cap weight — has lost nearly 6.8 percent through Thursday’s close. These losses have sent the major indexes down more than 5 percent, on pace for their biggest weekly declines since March.
The recent moves come as the third-quarter earnings season kicked off. Wells and Citigroup both reported better-than-expected earnings, along with J.P. Morgan Chase.
Expectations for this earnings season are high. Analysts polled by FactSet expected S&P 500 earnings to grow by 19 percent.
Source: cnbc.com | Original Link