Wall Street dips but trading still volatile

The Dow Jones Industrial Average had a more than 1,100-point difference between its high and low on Tuesday (Wednesday AEDT).

Tuesday's rebound came a day after a steep selloff that brought the biggest percentage daily declines for the S&P 500 and the Dow since August 2011 and a near 1,600 point intraday loss for the Dow.

"This is a reality check that the market was price to a perfection that didn't exist", says Swonk. "It's not back in a big way, but it's not going to be dormant like it was in 2017".

Bond buying by panicky investors also abated and yields on "safe" German, Japanese and USA debt edged up, resuming the trend of recent weeks as markets price further US rate rises and the withdrawal of stimulus in Europe.

European shares were positioned for a strong session after seven days of losses, with a pan-European index up 0.7% thanks also to a series of robust company earnings reports.

"If this is just the implosion of shorting volatility, it's not the end of the bull market", said Michael Antonelli, managing director of institutional sales trading at Robert W. Baird in Milwaukee. In this case, they track volatility in the stock markets as measured by VIX.

Data on Friday showed the year-on-year increase in average hourly earnings rose to 2.9 per cent, the largest rise since June 2009.

On Monday, the Dow plunged by almost 1,200 points or 4.6%, triggering follow-on losses in Asia and Europe.

"It's over in terms of the severe down move we've seen but reminds us that we're kind of in an aftershock phase", said Rick Meckler, president of investment firm LibertyView Capital Management.

"I think sentiment was a little too optimistic... what was driving the market up in January?" It rose by as much as 381 points at its peak, but also fell by as much as 127 points at its lowest ebb.

That is good for the economy, but Ms Hooper noted that higher pay to workers can reduce corporate profits, and those profits are the stock market's fuel.

The Standard & Poor's 500 index was up 12 points, or 0.5 percent, at 2,662.

The recent rout in the stock markets has wiped about $4 trillion off world equities.

The S&P 500 fell 6 percent Friday and Monday, and it's down 8.5 percent from the recent record high it set on January 26. Hong Kong's Hang Seng jumped 1.2 percent to 30,953.48, while the Shanghai Composite gained 0.1 percent to 3,376.36.

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Minutes after the European markets opened, there were declines across most sectors.

The Nasdaq composite fell 273.42 points, or 3.8 percent, to 6,967.53.

I don't believe the drama is over but don't get caught up in the daily gyrations.

'As ever, we can only wait to see how far markets ultimately fall, but having been expecting a correction for so long, we are relieved to get it over and done with and focus on more fundamental factors.

"There's no question that the level of risk in buying the dip from this point forward is going to be higher than it was through any time last year and really even a year before that", said Randy Frederick, vice president of trading & derivatives at Charles Schwab. That meant Tuesday was likely to be one of the most watched days on the markets in years.

Fidelity Investments on its Web site cautioned investors that timing the market is hard and that missing a small number of sharply up days could hurt long-run returns on investment. "This is similar to other "leveraged" events like the financial crisis, tech bubble or Asian crisis/'87 crash". "Also, the past week provides a reminder - painful but timely - that volatility has not been repealed".

Tuesday was the busiest day of trading on the New York Stock Exchange since November 10, 2016, two days after the presidential election.

Global financial markets were a lot calmer Wednesday.

Despite some sharp gains in early trade, Wall Street ultimately finished its day in negative territory. All but two stocks in the broad gauge declined, Bloomberg reported. The market downturn isn't being driven by bad economic news. The Dow quickly recovered much of that loss. The one-day drop of 1,175 points was one for the history books.

No one is anxious about that kind of inflation in the U.S. At the moment, inflation is very tame at just 1.7 percent. As Trump keeps saying on Twitter, the US economy also looks solid, with unemployment at a 17-year low. Visit MarketWatch.com for more information on this news.

Stock markets in Asia and the United States have been sitting at record levels and analysts have said for months a correction was due.

Still, the Dow's precipitous drop created a climate of uncertainty in global markets.

"The U.S. has been ridiculously bloated by the euphoria of Trump's tax cut and deregulation", he said.

"The sell-off is just a natural response to the moves in the US", said Richard Jerram, chief economist at the Bank of Singapore.

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