Post-Christmas trading has been incredibly successful for the bulls on the stock market. December 26 came with the best single-day gains ever for the day after Christmas. Cautious investors who were holding to observe the market saw more positivity on Thursday, with the NASDAQ ending with 0.4% growth, and the S&P 500 with 0.8%.
Now as we head into Friday trading, investors will be hoping for three in a row. Will the market be able to continue with this sudden surge of confidence?
Thursday Was Volatile Before a Late-Day Climb
Thursday was a fitting reminder of how the market can swing violently in a single day of trading. The Dow Jones Industrial Average was down 611 points early in the day, before gaining 900 points at the end of the session, to make a 260 point gain when the market closed.
This type of movement is becoming all too familiar, and it has left many small investors fearing engagement. Trading has become risky, with many long-term portfolio builders deciding to instead hunker down with high dividend stocks.
While Friday could end with more gains, it could just as likely go the other way. In the last nine sessions, the Dow Jones has fluctuated at least +/- 250 points. Some analysts have warned that investors should expect more volatility.
During the year, trade uncertainty and Fed rate hikes have caused investor sentiment to shift wildly. Now there’s even more uncertainty with a government shutdown and chaos in Washington. Partisan politics have left lawmakers at a stalemate, and the shutdown could continue into 2019.
Some Market Signs Should Still be Taken as Positive
Even while there’s uncertainty, there are still positive signs that investors can factor into their decisions. The Fed has advised that it will slow rate hikes next year, with two increases rather than the planned three. China is taking positive steps with its economic policy, which could benefit trade negotiations. The economy is still strong and growing, even if the rate of growth is slowing.
Recent history suggests that Friday could end with disappointing numbers. But, as every investor knows, history isn’t a guaranteed indicator of stock market’s performance.
Investors can at least take comfort from the fact that the market has been able to claw back some of its losses. If nothing else, it shows that confidence still exists and there’s no guarantee that we’re in a full bear market yet.
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