The Dow ended with a small decline Wednesday, failing to build on a big rebound from the day before as turbulence continued to upend financial markets.
The Dow Jones industrial average finished down 19 points, or 0.1%, at 24,893.35.
Wednesday’s trading session was again marked by wild price swings, a sign that investor nervousness persists.
The Dow swung more than 500 points, erasing a gain of 381 points that had followed an initial drop of 127 points. On Tuesday, the blue-chip average swung nearly 1,200 points from its low to its high before finishing up 567 points, or 2.3%.
Before trading in the U.S. began Wednesday, global markets flashed signs of stability, with shares in Japan finishing up 0.2% and stocks in Europe gaining strength and closing 2% higher.
Market pros say investors should expect more volatility in the days ahead as Wall Street adjusts to a changing investment landscape in which stronger economic growth may lead to higher inflation and interest rates.
“Aftershocks are likely near term,” James Barty, a global investment strategist at Bank of America Merrill Lynch, told clients in a research note.
Barty, however, says he remains positive on stocks in 2018. He is advising clients to buy them at lower prices because business conditions in the U.S. and around the globe remain strong and “are still supportive.”
The market is already seeing buyers come back following days of tumult.
“If investors aren’t buying on big spikes down, they’re not paying attention,” says Jamie Cox, managing partner of Harris Financial Group in Richmond, Va. “The drop is a gift for buyers.”
Recently, good news for the economy has been viewed as a negative for stocks, as investors fear the Federal Reserve might need to hike interest rates more aggressively to cool things off.
President Trump, in a tweet Wednesday, weighed in.
“In the ‘old days,” when good news was reported, the Stock Market would go up,” Trump tweeted. “Today, when good news is reported, the Stock Market goes down. Big mistake, and we have so much good (great) news about the economy!”
The 30-stock Dow’s early free fall Tuesday briefly pushed it into “correction” territory for the first time in two years after it dropped 10% from its recent record high on Jan. 26. The Dow kicked off trading Wednesday down 6.4% from its peak.
The recent bout of turbulence has been exacerbated by trading strategies that were betting on a continuation of market calm and low volatility but which soured when the wild swings kicked in.
Some Wall Street shops are advising investors to start putting together “shopping lists” of stocks to buy after the big sell-off.
