Wall Street

AP Photo/Richard Drew, File

Stock Market Rallies After Losing Streak

October 12, 2018 - 3:45 pm

NEW YORK (WCBS 880/AP) -- The stock market rallied Friday after a six-day losing streak.

Stocks remain volatile after that plunge, and are headed for their worst weekly loss in six months. Investors have been rattled by big increases in interest rates and concerns that U.S.-China trade tensions are impairing global economic growth.

Technology companies are leading the recovery. Longtime favorites of many investors, they had plunged in the last few days. The Dow Jones Industrial Average jumped as much as 414 points shortly after trading began. It had fallen more than 1,300 points over the previous two days. In afternoon trading it's on pace for a smaller gain.

Bloomberg Radio Stocks Editor Dave Wilson told WCBS 880’s Pat Farnack there was also some good news from financial companies.

“We saw some results out of the biggest financial companies that were well-received at least early on. JPMorgan Chase, Wells Fargo, and Citigroup all came out with third-quarter numbers, and their shares rose – at least initially,” Wilson said. “I say that because JPMorgan has now turned lower, and Wells Fargo and Citigroup have given back much of their gains, and in fact, we’re seeing that happen in the broader market as well.”

The S&P 500 index was on track to end a six-day losing streak as it rose 27 points, or 1 percent, to 2,755 at 3:15 p.m. Eastern time. The benchmark index tumbled 5.3 percent over the past two days, and it's down 6 percent since from its latest record high, set Sept. 20.

The Dow gained 180 points, or 0.7 percent, to 25,233. The Nasdaq composite gained 131 points, or 1.8 percent, to 7,460. Smaller companies sank again and the Russell 2000 index gave up 2 points, or 0.2 percent, to 1,542.

Apple climbed 2.6 percent to $220.13 and Microsoft gained 2.8 percent to $108.94. Consumer-focused companies also rallied, as Amazon jumped 3.2 percent to $1,775.37. Those are the three most valuable companies in the U.S., and they've taken startling declines the last few days. On Wednesday each took its biggest loss in more than two years. It was a dramatic end to three months of calm on the U.S. market.

The market's losing streak started when strong economic data and positive comments from Federal Reserve Chair Jerome Powell helped set off a wave of selling in the bond market. Investors dumped bonds as they bet that the U.S. economy would keep growing at a healthy pace. The sales pushed bond prices lower and yields to seven-year highs.

That drove interest rates sharply higher, which worried investors who felt that a big increase in interest rates could eventually stifle economic growth.

"What seems to have driven this is a fear interest rates were going to rise more quickly because the Fed was being too aggressive or the economy was going to overheat," said David Kelly, chief global strategist for JPMorgan Funds. Kelly said he doesn't think either of those fears is justified, as the Fed isn't raising interest rates that rapidly and economic growth hasn't sped up recently.

U.S. automakers Ford and General Motors continued to slump. GM shed 1.7 percent to $31.76, its lowest in almost two years. Ford, trading at its lowest in almost nine years, dipped 2.2 percent to $8.62. Both have fallen more than 20 percent this year as they deal with slowing sales and the Trump administration's tariffs on steel and aluminum, which are sending their manufacturing costs higher.

The stocks have fallen further in recent days following reports Ford might cut jobs. In late September, Ford CEO Jim Hackett said the steel and aluminum duties would cost the company $1 billion through 2019.

The International Monetary Fund cut its forecast for global economic growth this week because of trade tensions and increased interest rates.

Sam Stovall, chief investment strategist for CFRA, said he thought stocks fell too far, but there could be more turmoil ahead for the markets. While stocks had done well in spite of the rising trade tensions between China and the U.S., investors seem more worried now.

"Everybody has been pretty much dismissing the effect of the trade war on U.S. equities, and now they're beginning to think 'wait a minute, maybe there could be a problem,'" he said. "I don't think the reasons for the decline have been resolved."

High-dividend stocks including utilities, real estate investment trusts and household goods were little changed. Those stocks held up a bit better than the S&P 500 over the last six days. Investors view them as relatively safe, steady assets that look better when growth is uncertain and the rest of the market is in turmoil.

Bond prices edged lower. The yield on the 10-year Treasury note rose to 3.14 percent 3.13 percent. At the beginning of the year it stood at 2.46 percent.

U.S. crude oil added 0.5 percent to $71.34 a barrel in in New York. Brent crude, the international standard, picked up 0.2 percent to $80.43 a barrel in London.

Wholesale gasoline rose 0.5 percent to $1.94 a gallon. Heating oil fell 0.5 percent to $2.32 a gallon. Natural gas lost 1.9 percent to $3.16 per 1,000 cubic feet.

Asian stocks also rebounded. Japan's Nikkei 225 index gained 0.5 percent after sinking early in the day and following a nearly 4 percent loss on Thursday. Hong Kong's Hang Seng surged 2.1 percent and the Kospi in South Korea rose 1.5 percent.

European stocks finished mostly lower. The French CAC 40 dipped 0.2 percent and so did the FTSE 100 in Britain. The DAX in Germany slipped 0.1 percent.

After a big jump Thursday, gold lost 0.5 percent to $1,222 an ounce. Silver rose 0.2 percent to $14.64 an ounce. Copper slipped 0.1 percent to $2.80 a pound.

The dollar slipped to 112.01 yen from 111.94 yen. The euro fell to $1.1563 from $1.1594.

(© 2018 WCBS 880. The Associated Press contributed to this report.)