Unlock Premium Data: Up to 50% Off InvestingProCLAIM SALE

Wall Street may gain Monday but unlikely to mute December losses

Published 12/30/2018, 07:51 PM
Updated 12/30/2018, 07:55 PM
© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York

By Jessica Resnick-Ault

BOSTON (Reuters) - Investors could see one last boost to Wall Street stocks in the final trading session of the year on Monday, but they do not expect gains to offset losses in the worst December since the 1930s.

“I think there’s a chance that the market could rally into the end of the year,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

Potential for positive news on a trade dispute with China and anticipation of coming remarks from Federal Reserve Chairman Jerome Powell could lift the market, Dollarhide said. Still, no matter how strong any potential rally is, market unease is expected to remain.

“When you start going through December and it's the worst December since the Great Depression, it leaves a very strong lasting image as to how bad it has been," said Dollarhide. "There’s no getting around that no matter how much we rally tomorrow.”

Last week started off with Wall Street's worst-ever Christmas Eve drop, pushing the S&P 500 to within a whisker of bear market territory. Overall, the global MSCI index, the S&P 500, the Dow and the Nasdaq are headed for their worst years since the 2008 financial crisis.

While data on consumer spending has been strong, housing data has not and the market has been see-sawing amid political insecurity and a U.S. government shutdown.

"It's a pretty illiquid day Monday ... so I don't think expectations for fireworks are too high," said Rick Meckler, partner, Cherry Lane Investments in New Vernon, New Jersey. "I think you're seeing a good balance now of buyers coming into the market and providing a more solid base and the potential for a little bit of upside."

U.S. President Donald Trump has suggested progress has been made in a trade dispute with China, which could boost stocks, Meckler said. Additionally, strong consumer data from Christmas spending could support the market.

But after the violent swings this month, the last day of trading is expected to be relatively muted. Few companies make major announcements on the last day of the year, and trading volumes are expected to be light.

Disappointing economic data on Friday reinforced caution, including Japan's slowing industrial output and retail sales, declining German inflation, and U.S. data for November showing contracts to buy previously owned homes fell unexpectedly.

Breaking with the bad news, the Chicago Purchasing Management Index came in ahead of consensus.

Major indexes moved in and out of positive territory on Friday, with the Dow and S&P finishing modestly lower, while the Nasdaq eked out a slight gain.

"I think Friday's close should be viewed as very positive for bulls," said Oliver Pursche, a board member at Bruderman Asset Management. But despite the turnaround from significant losses in the session, Pursche said investors should be cautious moving into January. "Investors should expect continued outsized moves to the up and down side."

© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.