BOSTON (Reuters) – Investors can see one last push for Wall Street shares in the trading session later this year on Monday, but they don't expect profits to offset the worst December losses since the 1930s.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, USA, December 28, 2018. REUTERS / Jeenah Moon
"I think there is a chance that the market can rally until the end of the year," said Jake Dollarhide, chief executive of Longbow Asset Management in Tulsa, Oklahoma.
Potential for positive news about trade disputes with China and anticipation of upcoming comments from Federal Reserve Chair Jerome Powell could lift the market, said the Dollar. However, no matter how strong the potential rally is, market anxiety is expected to remain.
"When you start past December and this is the worst December since the Great Depression, it leaves a very strong image of how bad it is," said the Dollar. "There is no way to work around this, no matter how much we unite tomorrow."
Last week began with the worst Christmas decline on Wall Street, pushing the S & P 500 into the bear market region mustache. Overall, the global MSCI index, the S & P 500, the Dow and the Nasdaq are heading for their worst year since the 2008 financial crisis.
While data on consumer spending has been strong, housing data has not and markets have been looking around amid political insecurity and U.S. government closure.
"It's a very illiquid day on Monday … so I don't think the expectations for fireworks are too high," said Rick Meckler, partner, Cherry Lane Investments in New Vernon, New Jersey. "I think you see a good balance now of buyers coming to the market and providing a more solid base and the potential for a slight increase."
U.S. President Donald Trump has suggested progress has been made in the trade dispute with China, which could increase stocks, Meckler said. In addition, strong consumer data from Christmas expenditures can support the market.
But after a hard swing this month, the last trading day is expected to be relatively muted. Some companies made big announcements on the last day of the year, and trading volume is expected to be small.
Disappointing economic data on Friday strengthened caution, including slowing Japanese industrial output and retail sales, declining German inflation, and US data for November showing contracts to buy previously owned homes dropped unexpectedly.
Branching with bad news, the Chicago Purchasing Management Index came before consensus.
The main indexes moved in and out of positive territory on Friday, with the Dow and S & P ending slightly lower, while the Nasdaq rose slightly.
"I think Friday's closure should be seen as very positive for bulls," said Oliver Pursche, a board member at Bruderman Asset Management. But despite a turnaround from significant losses in this session, Pursche said investors must be careful to move to January. "Investors should expect the outsized move to continue up and down the side."