US Stocks Rebound After Selloff

20 Jan 2016 | Author: | No comments yet »

U.S. Stocks Rebound After Selloff.

United States markets were higher in early trading Monday, rebounding after two days of heavy selling last week. U.S. stocks looked set to rebound from a losing week on Monday, as investors shook off weak oil prices and appeared ready to hunt for bargains in the run-up to the Christmas holiday.

Stocks have seen wide swings in recent weeks as investors braced for the Fed’s plan to increase rates for the first time in nearly a decade, which was announced last Wednesday. Dow Jones Industrial Average futures YMH6, +0.80% surged 125 points, or 0.7%, to 17,142, while those for the S&P 500 index ESH6, +0.95% jumped 17.10 points, or 0.9%, to 2,009.25. Shares initially rallied following the Fed decision, but those gains quickly gave way to a reversal amid renewed worries about slowing growth overseas, trouble in the high-yield bond market and steep losses in commodities prices. Meanwhile, Spain’s IBEX was deep in the red, down 2.4% after the ruling Popular Party failed to win sufficient votes to form a government on its own, a rebuke by voters to unpopular austerity measures.

Investors appeared willing to overlook more losses for oil prices as Brent oil LCOG6, -1.03% tapped levels not seen since 2004 and U.S. oil prices CLG1, -1.57% fell nearly 1% to $35.69 a barrel. And with the low volume will come a pickup in volatility, so “Santa maybe just around the corner, but don’t rule out the commodity rout stealing the limelight yet again.” U.S. markets will close early on Christmas Eve and not reopen until Monday, in what will be a full day of trading. The rest of the week will be busy, and Wednesday marks the busiest day for data releases, with durable goods orders, and consumer spending and sentiment all coming at once. SPAIN ELECTION One market that wasn’t faring well Monday was Spain’s IBEX, which was down 2.8 percent after Sunday’s election saw the far-left Podemos and the business-friendly Ciudadanos parties win a number of seats. Ericsson Telefon AB ERICB, +4.58% ERIC, +5.04% surged in European trading on Monday after the Swedish maker of telecom equipment said it settled litigation with Apple Inc.

THE CONTEXT Although Spain’s economy has been growing strongly over the last year, its public finances remain strained amid unemployment levels of around 20 percent. Though Spain did not need a financial bailout like others in the 19-country eurozone, such as Greece and Portugal, the Popular Party government has been pursuing relatively tough budgetary policies and wide-ranging economic reforms.

In an interview on “60 Minutes” on Sunday, Apple Chief Executive Officer Tim Cook defended the company’s production locale of China and criticized U.S. corporate tax policy. ANALYST’S TAKE “We could now be facing an era of political paralysis and instability in Spain,” said Craig Erlam, a senior market analyst at OANDA.

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