Dow surges 700 points, recovers from Christmas Eve plummet

Wall St set to rebound after four-session slide
December 26, 2018
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December 27, 2018

Dow surges 700 points, recovers from Christmas Eve plummet

Santa Claus came a little late this year — but Wall Street is smiling anyway.

The Dow Jones industrial average surged nearly 700 points in late Wednesday trades — more than offsetting the 653-point drop in Monday’s shortened session that had made history as the worst-ever Christmas Eve for the blue-chip index.

Both the S&P 500 and Nasdaq joined in Wednesday’s rebound, climbing 2.9 and 3.8 percent, respectively. Nevertheless, analysts warned that the gains don’t necessarily spell the end of the volatility that has plagued markets in recent months.

“We’re in for a relief rally that could last a couple days … But that doesn’t change the overall trend,” Peter Cardillo, chief market economist with Spartan Capital Securities in New York, told The Post.

Wall Street was juiced early Wednesday after Mastercard reported that this year’s holiday shopping season was the strongest in six years, with shoppers shelling out $850 billion for gifts.

“This shows the US consumer remaining resilient despite market headlines,” Mona Mahajan, US investment strategist at Allianz Global Investors, told The Post.

Also helping Wednesday’s rally was a roughly 8 percent jump in oil prices following weeks of steep declines.

But with an absence of solid economic data until the new year, analysts were hesitant to say the rebound would continue for the last few trading days of the year.

“For this rally to represent the bottom, we would need help from other fundamental measures,” Jack Ablin, chief investment officer at Cresset Capital, told The Post.

The Labor Department will report jobs figures on Jan. 4, and companies will start reporting their fourth-quarter earnings soon thereafter.

Wednesday’s rally came on the heels of a Monday rout that developed as investors struggled to decipher a flood of messages from Washington and ultimately decided to put their cash on the sidelines instead.

Monday’s sell-off, which had both the Dow and S&P 500 flirting with bear territory, followed a bizarre Sunday night tweet from Treasury Secretary Steve Mnuchin in which he said he called the chief executives of the six largest banks in the US and was assured they have “ample liquidity.”

The tweet, while said to be well-intentioned, had the opposite effect, leading many to wonder why the calls were necessary at all.

Adding fuel to Monday’s fire were tweets from President Trump, who continued his attacks against the Federal Reserve, claiming the central bank is the “only problem our economy has.”

Discord in Washington — which now also includes a partial government shutdown — made already skittish investors run for the exits.

Though many on Wall Street have pointed to bright spots in the economy — such as low unemployment — to say that the market is oversold, confidence in Wednesday’s rally is so far cautious for the rest of the year.

“The mix of light trading and emotions makes it really tough to gauge,” Ablin said.