This post was originally published on this site
Stocks on Wall Street rose again on Wednesday as markets shook off a tumultuous several days of trading and investors focused on the continuing strength of the global economy.
After registering a 1.7 percent gain on Tuesday, the Standard & Poor’s 500-stock index rose again, drawing strength from large industrial companies positioned to capitalize on global growth, and investors hunting for potential bargains from recent selling.
Ball Corp., a maker of metal cans that is based in Colorado, was one of the best-performing stocks in the S.&P. Shares in Ball, which has plants around the world, rose sharply after the company reported favorable earnings results and cited momentum in its business supplying the aerospace industry.
“For investors, there are two paths — either go with the panic or stick with the fundamentals,” said Carsten Brzeski, an economist at ING Bank in Frankfurt. “Over the last 10 years, we have learned to expect the unexpected.”
A renewed focus on the health of the global economy underscored the swiftly shifting sentiment among investors. Just a few days ago, the Labor Department’s most recent jobs report, which showed the United States economy adding a solid 200,000 jobs in January, helped send markets sharply lower. The report also showed wage growth rising at its fastest pace in years.
Those developments, on their face, should not be bad signs for an economy that is roughly 70 percent consumer spending. But some economists consider growth in wages as an indication that r inflation could rise. And investors took the wage data as a reason to worry that the Federal Reserve could raise interest rates more quickly than policymakers had previously suggested they would. The low interest rates that have prevailed since the financial crisis have been a cornerstone of the long bull market for stocks.
Stocks fell sharply starting Friday, the day the January jobs report was issued, with the S.&P. dropping more than 7.5 percent from its peak in late January. The sell-off briefly spread through global markets. But a solid performance by markets in the United States on Tuesday seemed to cool the fire.
Amid the rally on Wednesday, President Trump broke his silence on stock market volatility, posted a message on Twitter promoting the health of the American economy and calling the recent sell-off a “big mistake.”
“We have so much good (great) news about the economy!” Mr. Trump wrote.
Stock markets in Asia and Europe showed mixed results on Wednesday, with some up, some down and some effectively flat. Asian stocks started strongly, but investors grew more cautious as the trading day went on. Stocks in Tokyo ended about where they had begun, while those in Hong Kong finished down modestly. An index of Chinese company shares traded in Hong Kong fell 2 percent.
Benchmark indexes in London, Paris and Frankfurt rose after the start of trading in New York and posted solid gains.
Other market measures underscored easing tensions among investors. The index of stock market volatility known as the VIX — officially, the Chicago Board Options Exchange Volatility Index — fell sharply. It had surged to its highest level in years during the worst of the recent sell-off.
Robert S. Kaplan, the president of the Federal Reserve Bank of Dallas, said during an appearance in Frankfurt that the recent losses could be seen as positive if they discouraged investors from relying on borrowed money. That will be increasingly important as central banks tighten monetary policy and credit becomes more expensive.
“I think that can be a healthy thing,” he said.
Mr. Kaplan added that share prices remained high “relative to history — that doesn’t mean they can’t go higher,” and he said that the decline in stock markets was not a problem for the broader American economy.
The American economy does indeed appear to have significant momentum. At 4.1 percent, the unemployment rate is low. And the gross domestic product grew at an annual clip of 2.6 percent in the fourth quarter. Recent corporate earnings reports have been solid, with several companies outlining plans to increase investment, in part because of the tax code overhaul that became law in December.
“As we look forward, the market drivers of better economic prospects and higher profits have not changed at all,” Steve M. Duryee, a portfolio manager at Morgan Stanley’s Bergman Continuum Group, a wealth management firm, said in an email to clients.