It’s been a particularly bad December for American markets, but we can now point to Boxing Day as a positive blip on this month’s radar. According to CNN, the Dow enjoyed a 5 percent gain on Wednesday, rising 1086 points for its biggest daily points gain ever. The S&P and Nasdaq saw similar impressive gains of 5 percent and 5.2 percent respectively.
Boxing Day was the first day of trading since the worst Christmas Eve ever for markets. Even a shortened trading period couldn’t keep the Dow from falling over 600 points, while a 2.7 percent drop on the S&P technically signaled the start of a bear market, triggered when stocks have dropped over 20 percent of their recent high value.
Analysts at CNBC pointed the finger for Monday’s Christmas Eve performance on turmoil in Washington, with the Inquisitr highlighting President Donald Trump’s recent attacks on the Federal Reserve as particularly troubling. Markets rarely thrive on uncertainty, and an attempt by Trump to fire the politically independent Federal Reserve chairman, Jerome Powell, would take the nation into uncharted financial territory.
— CNBC Now (@CNBCnow) December 26, 2018
In contrast, Boxing Day showed what a news cycle consisting of relative silence can do for markets. CNN also quoted MUFG managing director Chris Rupkey, who claimed the market was due for an upward correction after all the recent losses.
“Investors went bargain shopping the day after Christmas, where stocks just got too cheap relative to earnings, future earnings, any reasonable assessment of earnings,” Rupkey said.
“The coast is clear, back up the truck, investors are saying enough already, the world is not ending.”
That doesn’t change the overall negative direction markets have taken through December, or the worrying day-to-day volatility over Christmas. The Inquisitr reports that Donald Trump blames much of the recent market issues on the Federal Reserve raising interest rates too quickly, and he’s looking to his Treasury Secretary Steven Mnuchin to handle the situation. But after a recent meeting between Mnuchin and bank executives only fueled Christmas Eve uncertainty, a CNN report claims Mnuchin’s job may be in “serious jeopardy.”
There’s more than enough chaos in Washington to blame for various elements in the recent downturn. As Inquisitr has covered, the government is in the midst of a shutdown over funding for the controversial border wall that Trump made a cornerstone of his election campaign. Inquisitr has also touched on ongoing trade disputes between the U.S. and China, which have only heated up after the administration had powerful Huawei CFO Meng Wanzhou arrested in Vancouver.
As bad as all this U.S. political uncertainty is, the real fear is of a global economic slowdown. While European markets were closed on Wednesday, Japan’s Nikkei only managed a 1 percent recovery on Boxing Day despite suffering the same 5 percent plunge as U.S. markets.