Mid-Day Update: Global Growth Worries Plague Wall Street

Wall Street’s major averages have reversed most of Wednesday’s early losses as a rally in oil futures and bargain-hunting in the banking and technology sectors trimmed a 350+ point loss in the Dow Jones Industrial Average.

Stocks kicked off the new year with outsized losses as fresh worries about sluggish global growth plagued equity markets, resulting in a 370-point loss for the Dow at the open. China’s Caixin manufacturing index, coupled with comparable indices in France, Italy and Sweden, were in contractionary mode, raising alarms about the pace of global growth and driving market indices across Asia and Europe significantly lower.

US markets lost ground at the open but gained upward traction in tandem with a rally in oil futures and impressive rebound in beaten-down sectors. Brent crude futures raced more than $3 higher in minutes on the heels of export data from Saudi Arabia showing reduced flows of oil into China and the US. Brent crude spiked to $56.56 per barrel from $53 per barrel, driving up the price of the commodity by more than 3% from the prior day’s close.

But the rebound in equity assets had only a modest impact on safe-havens as investors remain cautious surrounding forecasts for global growth. While the Dow made a 300 point reversal, the 10-year yield only increased 2 basis points and gold barely budged from $1,280 per ounce. And copper, a barometer of global growth expectations, continued to trade lower, down for a fourth consecutive day.

Data released this morning contributed to the negative price action earlier as the final manufacturing PMI declined further to a 15-month low of 53.8 in December from the preliminary read of 53.9 and November’s 55.3. Business confidence fell to its lowest level since Oct 2016 while the rate of job creation hit an 18-month low.

Europe’s major bourses erased most of Wednesday’s losses with the UK’s FTSE-100 and German DAX poking through into positive territory.

Crude oil was up $1.79 to $47.20 per barrel. Natural gas was up $0.01 to $2.95 per 1 million BTU. Gold was up $6.60 to $1,278.90 an ounce, while silver was up $0.08 to $16.61 an ounce. Copper was down $0.02 to $2.61 per pound.

Among energy ETFs, the United States Oil Fund was up 3.57% to $10.01 with the United States Natural Gas Fund down 0.50% to $24.59. Amongst precious-metal funds, the Market Vectors Gold Miners ETF was up 0.50% to 21.15 while SPDR Gold Shares was up 0.27% to $121.56. The iShares Silver Trust was up 0.38% to $14.57.