Stocks end mostly lower but log first weekly gain in a turbulent December

Stocks end mostly lower but log first weekly gain in a turbulent December

S&P 500 logs 2.9% weekly rise

Stocks ended mostly lower in a choppy Friday session but held on to their first weekly gains of the month in a turbulent holiday environment marked by wild swings between gains and losses.

How are benchmarks performing?

Stocks flipped between moderate gains and losses over the course of the session but saw a late push to the upside fizzle. That left the Dow Jones Industrial Average DJIA, -0.33% to settle 76.42 points lower at 23,062.40, a loss of 0.3%, while the S&P 500 SPX, -0.12% finished at 2,485.74, a decline of 3.09 points, or 0.1%. The Nasdaq Composite COMP, +0.08% rose 5.03 points, or 0.1%, to 6,584.52. For the week, the S&P 500 logged a 2.9% rise, while the Dow rose 2.8% and the Nasdaq rallied 4%. It was the first weekly gain for all three indexes since the end of November.

All three indexes are still nursing sharp month-to-date losses, however, with the S&P down 9.9%, the Dow off 9.7% and the Nasdaq down 10.2%. The Nasdaq entered a bear market this month, defined as a 20% pullback from a recent peak, while the S&P 500 and Dow remain solidly in correction territory with declines of more than 10% from their late September and early October highs, respectively.

On Thursday, the Dow industrials rose 260.37 points, or 1.1%, to end at 23,138.82, after dropping as much as 611 points intraday. The S&P 500 also erased a sharp decline to rise 0.9% to 2,488.83. The Nasdaq Composite overcame a loss of more than 3% to close up 0.4% at 6,579.49.

The Dow’s move from a 2.67% decline at its session low to a positive finish marked its biggest such intraday swing since Oct. 4, 2011, when it recovered from a fall of 2.75% at its low, according to Dow Jones Market Data. The Thursday turnabout was the largest such swing for the S&P 500 since May 25, 2010, and the largest for the Nasdaq since Nov. 18, 2008.

Outsize moves have been the pattern of the week. The Dow’s biggest-ever one-day point rise came Wednesday, when it ended with a gain of 1,086.25 points, or 5%, to 22,878.45. The S&P 500 soared 5% to end at 2,467.70, and the Nasdaq rose 5.8% to 6,554.36. That rally came after a brutal selloff in a shortened Christmas Eve session Monday.

What’s driving the market?

Markets have been batted around this week as a result of light holiday volume and computer-driven trading. Those factors have triggered several sharp daily moves and a rise in volatility, which has taken investors by surprise in what can be a quiet period of trading at the end of the year, analysts said.

A still-unresolved government shutdown remains as an overhang for stocks, as do concerns about the economy and the next round of company earnings. Analysts caution that volatile conditions for trading could extend well into the new year.

What are analysts saying?

It’s no surprise to see some “selling fatigue” after several sessions of virtually “indiscriminate selling” contributed to the stock market’s steep December losses, said Eric Wiegand, senior portfolio manager at U.S. Bank Wealth Management, in a phone interview. That said, it takes time for markets to establish a bottom, a process that usually entails retests of the lows and sideways movement before a sustainable move higher, he said.

Investors should see some clarity in the new year, either positive or negative, as the fourth-quarter earnings season gets under way in mid-January and market participants look ahead to a late-January Federal Reserve meeting that should offer further clarity on the central bank’s policy intentions, he said.

“Although U.S. stock markets bounced back to life yesterday to end positive and Asian shares traded mostly higher this morning, it is certainly too early for any celebrations,” said Lukman Otunuga, research analyst at FXTM, in a note. “With investor appetite for riskier assets seen diminishing amid the unfavorable market conditions, global equity markets remain vulnerable to downside shocks.”

What stocks are in focus?

Shares of Tesla Inc. TSLA, +5.61% rose 5.6% after the company added Oracle Corp. ORCL, -0.33% co-founder Larry Ellison and Walgreens Boots AllianceWBA, -0.45% executive Kathleen Wilson-Thompson to its board.

What’s on the economic calendar

The partial government shutdown means the release of November data on advance trade in goods that had been scheduled for Friday morning was postponed.

Meanwhile, the MNI Chicago business barometer, a survey-based gauge that’s often a signpost for the broader U.S. economy, slipped to a still robust 65.4 pointsin December from an 11-month-high reading of 66.4 a month ago.

The National Association of Realtors said pending home sales fell 0.7% in November to a reading of 101.4, a four-year low and another sign of widespread weakness in the real-estate market.

How are other markets trading?

Oil prices rallied Friday, with the U.S. benchmark CLG9, +1.14% finishing with a gain of 1.6%, as the commodity rebounded from a sharp selloff Thursday. Oil was positive after data from the Energy Information Administration showed U.S. crude supplies fell by 46,000 barrels in the week ended Dec. 21.

The ICE Dollar Index DXY, -0.19% was off 0.1%, led by a fall in the dollar against the Japanese yen USDJPY, -0.64% , which is viewed as a haven asset in times of economic and financial-market uncertainty.

Asia markets failed to pick up the baton from Wall Street, with the Nikkei 225 index NIK, -0.31% slipping modestly and the Shanghai Composite IndexSHCOMP, +0.44% rising just 0.4%. European stock markets moved higher.

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