NEW YORK —
Wall Street’s roller-coaster ride extended into Thursday, with stocks staging a late-day recovery as investors turned their attention to fresh data about the US economy.
There were only a few new clues about the economy’s health, and they sent mixed signals. Weekly jobless claims were lower, a positive sign. But expectations for job growth, as measured by the monthly consumer confidence index, hit a five-month low.
After a drop of as much as 2.5 percent earlier in the day, the S&P 500 rallied in the final minutes of trading to end slightly higher. The gains added to a surge Wednesday that was the benchmark’s best day since 2009.
Investors have struggled to find their bearings this month as the S&P 500 hurtled toward bear-market territory, defined as a 20 percent drop from a recent high point. They are trying to assess the prospects for economic growth and corporate profits as interest rates rise and a trade war with China persists, while — most recently — also factoring in internal White House turmoil and President Trump’s antipathy toward Jerome Powell, the Federal Reserve chairman. A government shutdown that is nearly certain to extend into the new year, which could deprive investors of economic data usually released by the Commerce Department, is only adding to the uncertainty.
“It’s an inflection point in expectations,” said David Donabedian, the chief investment officer for CIBC Private Wealth Management in Atlanta.
Trading volume during holiday weeks is usually lower than in the rest of the year, and that means each trade can have an outsize effect on stock prices. But huge swings were taking place well before the holiday slowdown.
Howard Silverblatt, a senior index analyst for S&P Dow Jones Indices who tracks and catalogs market performance, said stocks’ swings have been larger and more frequent this year than at any other time since 2011. On 15 days in 2018, the value of the S&P 500 changed more than 3 percent. Such a large change did not occur on a single day in 2017 and only happened on five days in 2016. In 2011, when ratings agencies downgraded US government debt, roiling the stock market, the days on which the S&P lost or gained 3 percent numbered 24.
“It’s higher today than it has been for the last several years, and you can feel it,” Silverblatt said of the market’s volatility.
Donabedian s aid deep worries about the future, rather than more superficial factors, were behind the market tumult.
“There are a lot of people searching for something else, some technical factor, or is it algorithmic trading, but I really think this is driven by rising uncertainty about the fundamentals: earnings, the economy, and interest rates,” Donabedian said.
Concerns about the White House’s response to Wall Street’s decline grew last week as Trump used Twitter to vent his frustration over the Fed’s decision to keep raising interest rates and sought guidance from aides about whether he could fire Powell. Despite the president’s frustrations, a number of White House officials have tried to reassure investors that Powell’s job is safe.
Traders have had their own concerns with Powell, as well: At a news conference Dec. 19, he used a word that is still ringing in market participants’ ears — “autopilot” — to describe the Fed’s likely approach to monetary tightening.
This suggested to investors that the Fed might not be willing to change its plans to further raise rates and drain money from the financial system, even if market turmoil persisted. Other Federal Reserve officials quickly moved to assuage those worries after the Dec. 19 announcement, but Donabedian said he expected anxiety about the Fed’s flexibility to persist until at least the end of the next meeting of the Federal Reserve Board on Jan. 30.
The partial shutdown of the federal government could also begin to wear on investors as they are forced to operate without official data that could help answer lingering questions about the health of the US economy. On Thursday, for instance, a Census Bureau report on new home sales was delayed because of the shutdown.
Investors got some data to digest Thursday, and it was not encouraging. A report on consumer confidence by the Conference Board, a business group, showed Americans growing more pessimistic about economic conditions.
In China, officials said industrial profits had declined in November for the first time in three years, a reminder that the growth of the nation’s economy, the world’s second-largest, continues to slow.