Financial Markets Wall Street

Specialist Gregg Maloney works on the floor of the New York Stock Exchange, Friday, Jan. 11, 2019. Stocks slipped Friday as falling oil prices dragged down energy companies, but the S&P 500 remained on track to close out its third straight winning week following a brutal stretch in December.

NEW YORK — Welcome to the brave new world of investing, where every day in the stock market can feel like bedlam.

Investors have been careening from fear to relief and back again as they react to morsels of news about the health of the economy and corporate profits, the global trade war and when the Federal Reserve will next raise interest rates.

With each mood shift, stock prices have swung wildly. Unusually big moves — both up and down — have come at a frequency not seen in years.

On Friday, the S&P 500 index soared 3.4% following a stronger-than-expected U.S. jobs report, news of trade talks be­tween the United States and China and com­ments from the Fed seen as helpful for stocks.

It was a sharp reversal from just the day before when investors saw the glass de­ci­ded­ly half empty. On Thursday, the S&P 500 plunged 2.5% after a disappointing U.S. manufacturing report raised fears about a possible recession and Apple warned about weak iPhone sales in China. That two-day whiplash followed 2018, a year when the S&P 500 had 20 days where it swung by at least 2%, twice as many as any of the prior six years.

The market has gotten so topsy-turvy that when Friday’s jobs report first came out, about an hour before the New York Stock Exchange opened, some investors wondered if it would cause relief or panic. The numbers were strong, but were they so strong as to push the Fed to raise rates faster, which would be bad for stocks?

“I did find myself wondering how the market is going to react to this: Are people asking, ‘Is this good?’” said Ernie Cecilia, chief investment officer at Bryn Mawr Trust. “It just shows the environment we’re in. It’s uncertain how the market reacts, or overreacts.”

Expect the jitters to continue. Reports are coming that will give investors clues about whether their fears of a possible re­ces­sion are warranted, as well as updates on interest rates and trade policy. Among the approaching milestones that could be the next to roil Wall Street:

n Earnings season.

Starting next week, companies will begin reporting their profits for the last three months of 2018, and expectations are high. Analysts are forecasting 11.4% growth for S&P 500 companies, which would be the fifth straight quarter of gains top­ping 10%, according to FactSet.

Those numbers are key because stock prices tend to track corporate profits over the long term. But even more attention will likely be paid to what CEOs say about fu­ture profits.

Executives generally talk with anal­ysts and investors immediately after their com­panies’ quarterly earnings are re­leased. Stock prices could swing de­pend­ing on what they say about how mod­er­a­ting econ­om­ic growth, U.S.-China trade ten­sions and interest rates could affect their up­coming results.

Apple’s warning last week about slow iPhone sales in China, the world’s second-lar­gest economy, shocked the market and sent Apple’s stock down nearly 10%. On the same day, Delta Air Lines fell nearly 9% after it trimmed its forecast for fourth-quarter revenue.

n U.S.-China trade talks.

A U.S. delegation began talks in Beijing on Monday aimed at resolving a trade dis­pute that has alarmed global investors and threatens to drag down worldwide econ­omic growth.

The world’s two biggest economies are batt­ling over U.S. allegations that Beijing uses predatory tactics to acquire advanced tech­nol­ogies, potentially undermining Am­er­ican technological dominance. Ac­cord­ing to a March report by the U.S. trade representative, China hacks into Am­er­ican companies’ computer networks to steal trade secrets and forces foreign firms to share technology as the price of admission to the Chinese market.

The standoff will be difficult to resolve be­fore a March 1 deadline. That is when U.S. tariffs on $200 billion in Chinese im­ports are scheduled to jump to 25% from 10%. Chinese leaders have signaled their will­ingness to address U.S. complaints about America’s massive trade deficit with China by buying more soybeans, natural gas and other U.S. products.

But they are likely to resist pressure from Washington to scrap or scale back tech­nology policies they see as vital to China’s future prosperity and strength.

n Federal Reserve meeting.

The next Fed meeting comes in the last week of January, but most economists don’t expect much action from it. The central bank is likely to leave rates alone after raising them four times last year.

Investors instead will be more interested to hear what Fed Chairman Jerome Powell says in his news conference following the meeting. Markets have parsed every word Powell has said in public, hoping to divine clues about the path of interest rates. Higher interest rates can forestall inflation, but they can also slow economic growth and drive buyers away from stocks.

After Powell’s news conference in De­cember, for example, the S&P 500 slumped 1.5% on worries that the Fed seemed set on raising short-term rates three times into 2020 and letting its portfolio of bond purchases shrink on “automatic pilot.”

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