US stock rout pauses and Dow bounces 200 points as an ‘extraordinary’ quarter of losses comes to a close

It's been a rough quarter.

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It’s been a rough quarter.
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Getty Images / Mario Tama

  • US stocks bounced early Friday, fighting back after a horrible week.
  • All three US indexes were trading higher, with the Dow Jones Industrial Average up more than 1%.
  • The picture elsewhere is less positive. European stocks were marginally negative, while Chinese stocks fell close to 1% overnight.
  • While stocks were higher, investors were still reeling from the Federal Reserve’s hawkish tone on Wednesday, the resignation of US Defense Secretary James Mattis, and the possibility of a government shutdown.
  • Follow the latest market movements at Markets Insider.

The US stock market bounced Friday morning, with all three major indexes gaining in early trade, despite continued fears about the possibility of a government shutdown.

Markets had slumped Thursday after President Donald Trump refused to sign legislation to extend funding for parts of the government unless it included money to fund a wall on the southern US border. That sparked fears of a partial government shutdown. Investors had already been spooked earlier in the week after the Federal Reserve raised interest rates for a fourth time this year and continued to strike a hawkish tone.

Then, later Thursday, news emerged that Defense Secretary James Mattis was resigning. The S&P 500 is heading for a terrible quarter, down a whopping 15%.

“It’s looking increasingly unlikely that a late Santa surge is going to save what has been an otherwise horrible quarter,” Craig Erlam, a senior analyst at Oanda, said in an email Friday morning.

Friday, however, did seem set to provide a brief respite, with the Dow Jones Industrial Average up more than 1% after an hour of trading and the S&P 500 gaining 0.9%. The tech-focused Nasdaq was up by 0.3%.

Largely seen as a moderating influence on the president, Mattis on Thursday issued a resignation letter in which he took jabs at Trump’s bombastic, isolationist approach to foreign affairs and for failing to show “respect” to US allies.

Read more: While China and the US spar over trade, Europe quietly heads for its worst year since the financial crisis

Major indexes in Asia fell sharply overnight. China’s benchmark share index, the Shanghai Composite, dropped 0.8%, while Japan’s Nikkei was down 1.1%.

In Europe, the morning saw big losses that later moderated, with the Euro Stoxx 50 broad index down just 0.4% at about 3:45 p.m. in London.

Oil prices continued to slump overnight, with West Texas Intermediate crude falling below $45 a barrel. By Friday morning it had stabilized, trading at $46.09.

“Record highs to correction territory and flirting with a bear market – those that aren’t already there that is – it really has been an extraordinary quarter that’s got investors very concerned about the year ahead,” Erlam said. “The list of headwinds has been growing throughout the year and sentiment finally caved under the pressure of it all.”