Back From Dead or Dying Gasp? Bulls Wonder What Next After Rally

The price of oil fell 1.8 percent after posting its biggest increase in two years Wednesday.

Late Friday, there was a report that President Donald Trump was discussing the possibility of firing Federal Reserve Chair Jerome Powell, a move that could undermine confidence in the USA financial system.

All three major US indexes - Dow, S&P and Nasdaq - finished down 2 percent or more on Christmas Eve.

At 10.15am ET on Thursday, the Dow was down 441.29 points, or 1.93 per cent, to 22,437.16, while the S&P 500 fell 1.27 per cent and the Nasdaq composite sank 1.80 per cent. The S&P 500 .SPX opened lower by 25.20 points, or 1.02 percent, at 2,442.50. Canadian markets were closed Wednesday, Boxing Day. Investors also welcomed assurances by Kevin Hassett, chairman of the Council of Economic Advisers, that Jerome Powell's job is "100 per cent" safe.

In that time, the S&P 500 quadrupled, the Dow did nearly as well, and the tech-laden Nasdaq index climbed 500 per cent, before starting their current declines.

The market's sharp downturn since October intensified this month, erasing all of its 2018 gains and nudging the S&P 500 closer to its worst year since 2008. Markets in Hong Kong, Japan, France, Britain, Brazil and Mexico are all down for the month.

The concerns over a faltering global economy and signs of a crude oil glut pressured oil prices, sending Brent futures 1.7 per cent lower to $53.5 a barrel and partly reversing Wednesday's 8 percent jump.

The S&P 500 is careening toward its worst month of the record bull run and is down almost 17 per cent in the quarter as everything from higher interest rates to political turmoil in Washington to concern about global growth hammer at investor sentiment. On Christmas eve Trump tweeted: "The only problem our economy has is the Fed".

The consumer rally on Wall Street was echoed by Australian retail stocks, which were among the market's best performers on Thursday. The stock market's super day comes after retailers posted the best holiday shopping season in six years.

Although U.S. economic growth started to moderate from the "exceptionally strong pace" this year, the momentum remained strong, Goldman Sachs said in a report.

Following the opening bell, individual stocks getting battered included Viacom (4.1 percent), Conagra (3.1 percent), Campbell Soup Co. However, the Fed failed to signal that it was easing off its tighter policy approach as much as markets had expected.

"Thanks to the sharp rebound in USA shares, it is increasingly possible that Japanese stocks will end the year on a bullish note", said Yoshihiro Ito, chief strategist of Okasan Online Securities, using a finance term to describe when prices are rising. "Oil prices have just moved quite markedly". Brent crude, used to price global oils, gained 0.6 percent to $51.10 a barrel in London.

CURRENCIES: The dollar strengthened to 110.57 yen from 110.41 yen on Monday. Facebook, Alphabet, and Netflix, meanwhile, fell more than 1%. The euro rose to $1.1397 from $1.1353.

  • Anthony Vega