Heightened trade tensions and lingering fears of a recession continued to weigh on Wall Street for most of the day before soothing remarks from Atlanta Fed president Raphael Bostic and IMF managing director Christine Lagard restored investor confidence and set in motion an impressive rebound. After being down nearly 800 points at the open, the Dow closed just 77 points lower, while the Nasdaq closed in the green after being down as much as 2.4%.
Panic selling erupted overnight when the arrest of Huawai's CFO rekindled tensions between the US and China, sending global equity markets into a tailspin. The defensive tone was exacerbated by further tightening in the yield curve and another freefall in oil futures as members of the Organization of the Petroleum Exporting Countries failed to agree on production cuts.
Dallas Fed president Rob Kaplan's acutely dovish comments this morning -- "Fed needs to be very patient" -- failed to stifle the meltdown with the Dow opening 785 points lower with industrials and energy shares taking the biggest hit.
The Nasdaq wiped its feet at a 6-handle before buyers emerged, encouraged by Lagard's remark that fears of a recession were "overdone," and by Bostic's assurances that interest rates are "within shouting distance of neutral." The Wall Street Journal fueled the late surge higher with an article suggesting the Fed could step to the sidelines after one more hike in December. This pushed the major indices back into the green for 2018 with the Nasdaq taking the lead on gains in communication stocks.
Friday calendar could contribute to another volatile day with the release of the closely-watched monthly Labor Department report. Non-farm payrolls are expected to increase by 190,000 in November versus a 250,000 gain the month prior. Average hourly earnings, however, should pick up by 0.3% compared to a tame 0.2% gain in October.
Also on Friday's calendar is the preliminary Univ of Michigan consumer sentiment index for December and October wholesale trade.
Dow Jones Industrial Average was up 79.40 points (-0.32%)
S&P 500 was down 4.11 points (-0.15%)
Nasdaq Composite Index was up 29.83 points (+0.42%)
FTSE 100 was down 3.15%
Nikkei 225 was down 1.91%
Hang Seng Index was down2.47%
Shanghai China Composite Index was down 1.68%
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