MARKET UPDATE | Stocks mostly recover as wild ride continues

February 6, 2018 at 11:44a.m.

11:40 a.m. Update

NEW YORK (AP) — The U.S. stock market mostly recovered after an early plunge Tuesday and was down moderately in late morning trading, raising hopes of a halt to a global sell-off. The swings came one day after the steepest drop in 6 1/2 years.

Major indexes in Asia and Europe also fell following Monday’s 1,175-point drop in the Dow Jones industrial average. Investors remain fearful that signs of rising inflation and higher interest rates could bring an end to the bull market that has sent stocks to record high after record high in recent years.

Trading was choppy Tuesday, which was likely to be one of the most watched days on the markets in years.

The Dow Jones industrial average fell as much as 567 points shortly after the opening bell, then jumped as much as 367 points in the first half-hour of trading.

The index, which is comprised of 30 big-name U.S. companies, was down 108 points, or 0.4 percent, to 24,237 as of 11:25 a.m. The Standard & Poor’s 500 index, a broader market barometer that many index funds track, lost 18 points, or 0.7 percent, to 2,630. The Nasdaq composite shed 27 points, or 0.4 percent, to 6,939.

The steep drops Friday and Monday erased the gains the Dow and S&P 500 made since the beginning of the year, but both remain higher over the past 12 months. The Dow is still up 20 percent over that time, the S&P 500 15 percent.

After the sharp losses over the past three days, the S&P 500 is down 8.4 percent from the recent record high it set on January 26. That’s less than the 10 percent drop that is known on Wall Street as a “correction.”

Corrections are seen as entirely normal during bull markets, and even helpful in removing speculative gains and allowing new investors to buy into the market at lower prices. It has been an uncommonly long time since the last market correction, which ended almost two years ago.

In Tuesday’s trading, high-dividend companies including utility and real estate companies fell, as bond yields increased after a sharp drop on Monday. Retailers including Amazon and Home Depot made small gains, a possible sign of confidence the U.S. economy will keep growing.

UPDATE 11 a.m.

The stock market recovered after an early plunge Tuesday and was little changed in morning trading, raising hopes of a halt to a global sell-off in stock markets. The swings came one day after the steepest drop in 6 1/2 years.

Major indexes in Asia and Europe fell following Monday’s 1,175-point drop in the Dow Jones industrial average. Investors remain fearful that signs of rising inflation and higher interest rates could bring an end to the bull market that has sent stocks to record high after record high in recent years.

Trading was choppy in the early going Tuesday, likely to be one of the most watched days on the markets in years.

The Dow Jones industrial average fell as much as 567 points shortly after the opening bell, then jumped as much as 367 points in the first half-hour of trading.

The Dow was little changed at 24,334 as of 10:49 a.m. The Standard & Poor’s 500 index, a broader market barometer that many index funds track, was down 6 points, or 0.3 percent, to 2,641. The Nasdaq composite was down 9 points, or 0.1 percent, to 6,966.

After the sharp losses over the past three days, the S&P 500 is down 8.5 percent from the most recent record high it set on January 26. That’s less than the 10 percent drop that is known on Wall Street as a “correction.”

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UPDATE 9:50

The Dow Jones industrial average fell as much as 500 points in early trading, bringing the index down 10 percent from the record high it reached on January 26.

The drop in early trading Tuesday marked the third straight day of steep declines. The Dow quickly recovered much of that loss.

The swoon began Friday as investors worried that accelerating inflation and higher interest rates could derail the market’s record-setting rally.

Global markets also fell. European indexes were down about 2 percent, while Japan’s Nikkei lost 4.7 percent.

The Dow recovered some of its early plunge and was down 127 points, or 0.4 percent, at 24,255.

The Standard & Poor’s 500 index was down 8 points, or 0.3 percent, at 2,639. The Nasdaq composite was down 6 points, or 0.1 percent, to 6,956.

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9:40 UPDATE:

Dow Jones industrial average climbs more than 100 points, recovering from an early plunge of more than 500 points.

LONDON (AP) — Stock markets around the world took a battering Tuesday, following a dramatic sell-off on Wall Street that triggered concerns that a potentially healthy pullback from record highs could morph into a more protracted crash.

Hopes that Wall Street won’t repeat the scale of Monday’s losses helped limit the selling during European trading hours. Futures markets suggested another, but more moderate drop, in the U.S., with the Dow and S&P 500 futures down 0.8 percent and 0.2 percent.

The market mood turned decidedly fearful on Monday when the Dow Jones industrial average posted its biggest percentage decline since August 2011, driven by fears the U.S. Federal Reserve will raise interest rates faster than expected due to a pick-up in wages.

That has fed into widespread concerns that markets were stretched following a strong run over the past year that pushed many indexes to record highs. Some also question the possible role of computer-driven algorithmic trading in the precipitous declines or even the ramifications of the rise and fall in the value of virtual currencies, notably bitcoin.

“If investors look at underlying earnings growth and the fundamentals of the global economy, there is reason for optimism,” said Neil Wilson, senior market analyst at ETX Capital.

“However once this kind of stampede starts it’s hard to stop.”

Among the biggest fallers Tuesday was Tokyo’s Nikkei 225 stock average, which ended 4.7 percent lower at 21,610.24, having earlier been down a massive 7 percent. All other Asian markets tanked, too, including the Shanghai Composite index, which closed 3.4 percent lower at 3,370.65 and Hong Kong’s Hang Seng, which skidded 5.1 percent to 30,595.42. Australia’s benchmark S&P ASX 200 slid 3.2 percent to 5,833.30 and South Korea’s Kospi declined 1.5 percent to 2,453.31.

The selling has persisted into European trading hours, though at a more moderate pace. The FTSE 100 index of leading British shares was 1.9 percent lower at 7,194 while the CAC 40 in France fell 2.4 percent to 5,160. Germany’s DAX was down 2 percent at 12,433.

Though many stock indexes are close to where they started the year, the losses mark a reversal of fortune following a sustained period of gains, a pullback that some market pros have been predicting for some time.

Stephen Schwarzman, the chairman and CEO of financial firm Blackstone, warned recently of a potential “reckoning” in markets.