US Stocks Close Lower After Late-Day Rally
Michael Nagle/Bloomberg News
U.S. stocks surged back to pare the biggest one-day selloff in five months, with the Dow Jones Industrial Average cutting a loss of 550 points by two-thirds as investors speculated the rout that’s wiped more than $15 trillion from global equities has gone too far too fast.
A plunge that took oil past $27 a barrel sparked earlier selling that brought global equities near a bear market and fueled haven demand.
The Nasdaq Composite Index and the Standard & Poor’s 500 Index shaved losses of more than 3.5% as chip shares and those with the most short interest rallied. The afternoon surge wasn’t enough to push either into the green at the close, and both ended at the lowest levels in at least 15 months.
“Everybody has been perched on the edge of their chair waiting to see a capitulation day, in which you get a really steep flush in equities,” said Mark Luschini, chief investment strategist in Philadelphia at Janney, which oversees about $68 billion. “That’s usually indicative of a point where a market may stage a reversal, and we had that today.”
MSCI Inc.’s gauge of global equities fell to 19% below its May record, clawing back from the precipice of a bear market. Emerging shares remained 3% lower, while Russia’s ruble and Mexico’s peso fell to records. Yields on 10-year Treasuries dropped below 2% and the yen jumped to a one-year high.
“There are a lot of things behind” the selloff, Stephen Schwarzman, CEO of Blackstone Group, said in an interview Jan. 20 with Bloomberg Television’s Erik Schatzker from Davos, Switzerland. “You have economic things such as the slowing of the U.S. economy, which has been pretty gradual. You’ve got energy going down so quickly that you can almost get windburn. You’ve got China as an issue, which is is probably overdone. So when you put those factors together you have an unattractive brew along with the concern the Federal Reserve will raise rates and slow the economy further.”
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