Wall Street recovers after another day of volatility
The US markets recoups its losses at the end of the trading day.
Wall Street is recovering on the first trading day of 2019. The US stock market has been unpredictable throughout the day in a continuation of the volatility of last year.
What’s still affecting Wall Street
The US stock market was down by as much as 400 points before improving by the end of the trading day. Wall Street has been impacted by events around the world. China’s slowdown in manufacturing has led to a weakening in the nation’s economy . As the Asian markets tumbled, the effect on US stocks could be felt. Zhengsheng Zhong, macroeconomics expert, explained how China’s economy stumbled in December 2018.
‘In general, China’s manufacturing sector faced weakening domestic demand and subdued external demand in December. Companies had a stronger intention to destock and prices of industrial products were declining, which could further drag on production. It is looking increasingly likely that the Chinese economy may come under greater downward pressure,’ said Zhong.
Wall Street bounced back on the strength of the increase in oil prices and the subsequent surge in energy stocks. The markets were also affected by oil prices fluctuating in the new year. After falling to $53 a barrel, the commodity rebounded after the increased supply from the US and Organisation of Petroleum Exporting Countries (OPEC) members like Russia. The prices jumped after the OPEC associates promised to reduce their oil output. Mark Luschini, investment strategist with Janney Capital Management, noted that Wall Street was helped by the change in oil’s worth.
‘The market’s turn seemed the coincide with the turn in oil prices’, said Luschini.
Does buy the dip benefit stocks?
Stocks also saw an upswing through what some financial experts call ‘buying the dip.’ That strategy means that investors buy stocks as their prices decline. Phil Blancato, chief executive officer(CEO)of Ladenburg Thalmann Asset Management, believes that the late surge in the markets are a result of the strategy.
‘Finally, we're starting to see this buy-the-dip mentality creep into the market,’ said Blancato.
It remains to be seen whether buying the dip will continue to lift the US stock market.
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Be ready to act on ECB opportunities
Learn how the ECB’s monetary policy announcements affect interest rates and price stability ahead of its next meeting in 22 April 2021.
- How might the next meeting affect the markets?
- What are the key rate decisions to watch?
- Why is the Governing Council announcement important for traders?
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
