Wall Street rebounds but has worst week in 2 years

On Jan 9, the S&P 500 swung from gains of up to 2.2 per cent to declines of 1.9 per cent, echoing the big swings of the past week.
On Jan 9, the S&P 500 swung from gains of up to 2.2 per cent to declines of 1.9 per cent, echoing the big swings of the past week.PHOTO: AFP

NEW YORK • United States stocks ended a wild week with a burst of buying, pushing the S&P 500 up 1.5 per cent on Friday, but still recorded their worst week in two years, as investors braced themselves for more volatile trading ahead.

The sharp falls of last week confirmed the market was in a correction, down more than 10 per cent from a Jan 26 record high, and throwing the nearly nine-year bull market off course.

The newly volatile market was shaken in part by rising bond yields, which led stock investors to rethink their positions after months of steady gains.

The benchmark S&P 500 index ended the week nearly 9 per cent below the all-time high set just two weeks ago.

"I don't see any reason to think that we're setting a pattern for next week or the rest of the year," said Mr Rob Stein, chief executive officer of Astor Investment Management.

"The only pattern we're setting is more volatility."

On Friday, the S&P 500 swung from gains of up to 2.2 per cent to declines of 1.9 per cent, echoing the big swings of the past week.

The Dow Jones Industrial Average moved in a range of more than 1,000 points, a more modest change from last Monday when the Dow fell by as much as nearly 1,600 points. It ended higher by 330.44 points, or 1.38 per cent, to 24,190.9.

The S&P 500 gained 38.55 points, or 1.49 per cent, to 2,619.55.

Technology was the best-performing group on Friday, with Microsoft, Alphabet and Facebook giving the biggest individual boosts to the S&P 500.

Energy was the lone major S&P sector to end negative, as oil prices tumbled. The benchmark S&P 500 fell 5.2 per cent for the week, its biggest weekly percentage drop since January 2016.

The sharp sell-off in recent days was kicked off by concerns over rising inflation and bond yields, sparked by the previous week's January United States job report.

"You have a fundamental difference between the economy and earnings doing well, versus interest rates going up and inflation picking up, and it's still a question of which will dominate," said Mr Giri Cherukuri, head trader at OakBrook Investments.

Equities for years have looked relatively attractive compared with 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.

REUTERS

A version of this article appeared in the print edition of The Sunday Times on February 11, 2018, with the headline 'Wall Street rebounds but has worst week in 2 years'. Print Edition | Subscribe