The S&P 500 and Nasdaq Composite managed to close higher after a volatile day in the market, while the Dow gave up some last-minute gains and finished in the red.
Worries about trade and global growth had investors flee to safe investments like Treasury bonds and gold early Monday. This brought the 10-year US Treasury yield to a three-year low and pushed stocks lower. The Dow was down as much as 589 points at its worst.
It was the second positive day in a row for the S&P and Nasdaq following their worst performance of the year on Monday.
The 10-year Treasury bond last yielded 1.7122%, according to Refinitiv. Gold prices settled 2.4% higher at $1,507.30 an ounce, the highest level since 2013.
Stocks turned positive across the board in the last half hour of trading, erasing all of their previous losses in a volatile session for the markets.
US stocks are paring their losses in early afternoon trading after an this morning’s scare from the bond market that saw the 10-year Treasury yield near three-year lows.
The Nasdaq Composite reversed its losses and climbed into positive territory, up 0.2%.
The Dow is down only 0.3%, or 80 points, after it slid more than 500 points earlier in the day. The S&P 500 is only 0.1% lower.
Equities sold off Wednesday amid further uncertainty about trade and the global economy, which sent investors looking for safety in haven assets like gold and Treasuries.
Investors need to take a beat amid all of this headline-induced market volatility, Brian Belski, chief investment strategist at BMO Capital Markets, told CNN’s Alison Kosik.
People are managing their money based on fear, particularly younger investment managers who have never seen a market like today’s, Belski said.
But “the US stock market and economy remains the most stable in the world,” he said, adding that the market is supported by fundamentals.
Market volatility is the theme of the week, with stocks falling and 10-year Treasury yields near three-year lows as investors are making a run for safe havens.
Investors are worried about the fallout from the US-China trade war, as well as the health of the global economy.
The volatility in the market has scared investors into safer investments like Treasuries and gold. But “if you take a step back and look at our economy and our growth, the picture is still rosy,” Corpina said.
The sense of calm that prevailed on Wall Street for much of 2019 is ancient history. Investors are now very nervous about the US trade war with China and that’s unlikely to change anytime soon, according to Randy Frederick, the vice president of trading and derivatives for Charles Schwab.
Frederick told CNN Business Wednesday he thinks volatility is here to say. Investors should expect big moves (both up and down) depending on the latest headlines.
The good news? Frederick does not believe stocks are primed to plunge into a brutal bear market like in 2008. Why? Consumers are still spending. Earnings have remained solid. And the US-China trade war is a well-known risk, not a proverbial black swan.
That said, Frederick thinks that if President Trump does follow through with his threat to impose more tariffs on Chinese-made consumer goods on September 1, then that could lead to a market correction of more than 10%. The S&P 500 is now about 6% below its all-time high.
The head of the world’s largest hedge fund is bullish on China.
Ray Dalio of Bridgewater Associates thinks the time is right to invest in the Far East.
In a Bridgewater YouTube video, Dalio described China as an emerging powerhouse that is opening up to global investors.
“Now is the time that it’s opening up, and you can be early or you can be late,” Dalio said.
Index provider MSCI is quadrupling the weight of Chinese large-cap stocks this year, which will give index investors further access to those stocks. China’s yuan-denominated bonds have also been added to the Bloomberg Barclays Global Aggregate Index.
“I do think there’ll be a restructuring of the world order,” in terms of supply chains and trade, he said.
While China has its own set of idiosyncratic risks, it is less or at least no more risky than other markets, Dalio said.
And riskiest of all is not to be diversified.
The Real Estate Select Sector SPDR (XLRE) and Utilities Select Sector SPDR (XLU) ETFs have held up relatively well in the past week.
Big telecoms that pay giant dividends, such as Verizon (VZ) and CNN parent company AT&T (T), may also be safer places to hide if the broader market remains this volatile.
Charlotte Geletka, managing partner with Silver Penny Financial Planning, also said that investors who want to save must broaden their horizons.
Stocks may seem risky, but the alternative is putting your money in assets that will generate little, if any, return.
“We have a lot of clients with cash. Many of them still have PTSD from the 2008 and 2009 crisis. But we’re trying to urge people to add more risk,” Geletka said.
A new round of tariffs announced by President Donald Trump last week will hit the technology industry especially hard.
The 10% tariff on an additional $3 billion in Chinese goods set to go into effect in September would include dozens of consumer tech products, including smartphones, laptops, printers and speakers. That increase would bring the total amount of tariffs paid by the tech industry up to $2.7 billion from the $1.7 billion paid in June, which was already eight times higher than the amount paid in June 2018, according to data released Wednesday by the Consumer Technology Association.
That will mean higher prices for US consumers buying tech products, CTA President Gary Shapiro said. This could be especially harmful to technology companies as they head into the second half of the year when holiday spending is generally an important revenue driver.
Another sign of anxiety: A startling rush of money into bonds.
As demand for bonds grew the 10-year Treasury yield took a nosedive on Wednesday, sinking below 1.63%. That means the benchmark rate has been basically cut in half since last fall, reflecting a movement into safe investments and mounting expectations of more easy money from central banks.
It’s not just a US bond market phenomenon. Germany’s 10-year bond rates tumbled deeper into negative territory, reaching a remarkable -0.6%.
That means investors, who usually get interest, are instead paying holders of German bonds to park their money. Government debt in Switzerland and France dropped further into subzero territory as well.
Peter Boockvar, chief investment officer at Bleakley Advisory Group, wrote in a note to clients that the drop in yields is “getting scary.”
He added:
Frazzled investors are rushing to buy gold and government bonds as fears of a global recession, sparked by a trade war, grow more real.
The push into safer investments lifted US gold futures briefly above $1,500 per ounce on Wednesday for the first time in more than six years.
US Treasury yields, which move opposite price, collapsed to levels unseen since just before President Donald Trump’s 2016 election.
Searching for safe places to put their money, investors have flocked to gold, which tends to do well during times of uncertainty.
US stocks dropped at the opening bell on Wednesday, on track to erase Tuesday’s gains.
It has been a volatile week, with stocks recording their worst day of the year on Monday, before rebounding on Tuesday. The CBOE Market Volatility Index (VIX) rose more than 12% Wednesday.
US Treasury yields tumbled, with the 10-year yield near three-year lows at 1.6282%.
Amid the uncertainty in the markets and on the trade front, as well as concerns about global growth, gold prices rallied. Prices for gold are up 1.7% on Wednesday, nearing $1,500 per ounce, its highest level since 2013.
The Dow and the broader US stock market are headed for another wild day on Wednesday.
After a one-day respite, panic has reignited over trade. The 10-year US government bond yield tumbled near a three-year low of 1.6298%, as investors pour money into bonds out of fear the trade war could stunt global growth.
Gold was also a big winner Wednesday as investors sought safe assets. Prices edged toward $1,500 an ounce for the first time since 2013. Gold is up nearly 17% this year and rose 1.4% on Wednesday.
Futures for the Dow (INDU) are down 0.5%, while those for the S&P 500 (SPX) and the Nasdaq Composite (COMP) are 0.5% and 0.4% lower, respectively.
The stock market has been on a roller coaster ride lately, as investors focused on every twist and turn in the fraught economic relationship between the United States and China.
But Brian Belski, chief investment strategist with BMO Capital Markets, thinks Wall Street is overreacting.
He argues that if investors take a long-term view, they’d see that the economy and corporate earnings are still expected to grow at a healthy clip. After all, interest rates, inflation and the unemployment rate all are low.
Investing in streaming is expensive.
Disney (DIS) said after the bell on Tuesday that its revenue increased 33% during the three months ending in June, bolstered by its direct-to-consumer business that includes Hulu and blockbuster hits such as “Toy Story 4” and “Avengers: Endgame.”
But profits fell 51% as the company prepares for the launch of its new streaming service, Disney+, in November. Disney said it will offer a bundle that includes Disney+, ESPN+ and commercial-supported Hulu for $12.99 a month.
Shares fell 3% in premarket trading.
Currency tensions between the United States and China are easing slightly, though the relationship between the world’s two largest economies remains tense.
China on Wednesday fixed the yuan at a new 11-year low. But it’s taken steps to shore up its value, which has mollified anxious investors.
Stocks in Asia were mixed in response:
Meanwhile, European markets opened higher.
US stocks are also set to trade in the green. The Dow could open up 60 points, or 0.2%. The Nasdaq is tracking up 0.5%, while the S&P 500 is poised to increase 0.3%.
US stocks closed sharply higher on Tuesday, paring losses from earlier in the week.
The world’s central banks keep sending interest rates lower as fears about global economic growth take hold.
The Reserve Bank of New Zealand cut interest rates by 0.5 percentage points on Wednesday. That’s more than expected, and puts the official cash rate at a record low of 1.00%. The move sent New Zealand’s NZX 50 up 1.9%.
India’s central bank also announced a bigger cut than had been anticipated.
The Reserve Bank of India slashed its key lending rate to the lowest level in nine years in a bid to support the country’s faltering economy. Shaktikanta Das has now cut rates at each of his four meetings as head of the central bank.
The Bank of Thailand also announced a surprise rate cut Wednesday.
And those aren’t the only warning signs. German industrial production in June dropped more than 5% compared to the previous year. And Brent crude, the global oil benchmark, is in a bear market, down more than 20% from its recent peak in April.
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