Wall Street rallies after large losses earlier in trading day

Wall Street had a rally after declining by as much as 600 points for most of the trading day. The US stock market is experiencing more volatility at the end of the year.

Concern about the December downturn

The stock market closed on a positive note on the strength of utility and healthcare stocks. Despite the short-lived ‘Santa rally’ when shares are supposed to jump after the holidays, stocks have been down for most of December. Because of the uncertainty about the US government shutdown and concerns about the US-China trade impasse, the US consumer confidence index is down to its lowest point in five months. There have been a few bright spots, such as Nike and its better-than-expected second quarter (Q2) earnings.

However, even the good news in retail can’t overcome the many factors affecting the markets. Financial experts like, Bryan Reilly, managing director of CIBC Private Wealth Management, notes that with the US government shut down and the US Federal Reserve raising interest rates, consumers and investors are concerned about the markets.

‘While retail sales have been very strong, consumer confidence has ticked down here and that could continue unless there is progress made on trade, in the U.S. budget battle and certainly central bank’s policy,’ said Reilly.

What’s next for US markets in 2019

Despite the discouraging news from Wall Street, financial analysts hope that the markets will inspire companies to go public in the new year, like Uber. Michael Butler, chief executive officer (CEO) of investment firm Cascadia Capital, noted that companies could be launching their billion-dollar initial public offerings (IPO) soon in 2019 to possibly calm the volatility in the markets.

'We are hearing that companies are speeding up their IPO processes to try get out in the first half of 2019 given the recent volatility in the [US] public markets,’ said Butler.

The US Conference Board, a nonpartisan association that measures consumer confidence, had a mixture of optimism and caution for 2019. Lynn Franco, senior director of economic indicators at the organisation, said that the economy expanded in 2018, but could become more sluggish in the new year.

‘Expectations regarding job prospects and business conditions weakened, but still suggest that the economy will continue expanding at a solid pace in the short-term. While consumers are ending 2018 on a strong note, back-to-back declines in expectations are reflective of an increasing concern that the pace of economic growth will begin moderating in the first half of 2019, ‘ said Franco.

Economic indicators show that Wall Street will continue to be in for an unpredictable journey to end 2018.