Morning Minutes 12/31/2018

Morning Minutes

Stocks Rebound Into Year-End

December 31, 2018
8:45 am EDT

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

It has been quite a volatile month and year for US markets. This morning finds US indices shrugging off Friday’s day of mixed consolidation and pointing toward a positive open with Dow Futures up 241 points or 1.0%. Overseas, the Hang Seng gained 1.3% while the Dax is up 1.7%.

Since its December 24th low, near 21,800 the Dow Jones Industrial Average has recovered over 1,500 points and over 6.5%, taking the edge off some of the big losses seen earlier this month. At Friday’s close, the Dow was down 6.7% year to date, so it appears likely we’ll end up with the first down year for the Dow since 2015 and its worst year since 2008.

Today’s rebound has mainly been attributed in the press to positive comments from US President Trump following a call with Chinese President Xi over the weekend on trade. Apparently, progress is being made toward a big US-China trade deal. There hasn’t been any recent progress toward ending the partial US government shutdown. Perhaps in the new year we’ll see some movement, particularly after the new Congress starts later this week, which could have a positive effect on stocks as well.

I also think a combination of window dressing, short covering and bargain hunting could be giving stocks a tailwind early on. Today is quiet for economic news but the back half of the week is looking quite busy with manufacturing PMI reports due Wednesday, US ADP payrolls on Thursday and US Nonfarm Payrolls plus Canada employment on Friday.

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