Saturday, February 10, 2018
U.S. stocks ended a wild week with a burst of buying, pushing the S&P 500 up 1.5 per cent on Friday, but still recorded their worst week in two years, and investors braced for more volatile trading days ahead.
The S&P/TSX composite index, weighed down by another slide in oil prices and weak performance in the resource sector, ended the day in negative territory and closed at its lowest level in five months.
Even with Friday's gains, the U.S. benchmark S&P 500 fell 5.2 per cent for the week. During Friday's session alone, the S&P 500 swung from as high as up 2.2 per cent to down 1.9 per cent, echoing the big swings of the past week.
The Dow moved in a range of more than 1,000 points.
The wild swings this week blunted initial public offering activity on Wall Street in what was set to be the busiest week for new listings in more than 2½ years.
And all signs point to the disruption to IPOs continuing.
Ten companies had planned U.S. stock-market debuts for this week, according to Renaissance Capital, a manager of IPO-focused exchange traded funds. It would have followed the biggest January haul of IPO proceeds on record and would have been the most active IPO week since June, 2015, Thomson Reuters data showed.
Only six companies went ahead with their IPOs because of the volatile stock market, which has sapped much of the investor demand for new listings.
The benchmark S&P 500 and the Dow industrials on Thursday entered correction territory, both falling more than 10 per cent from Jan. 26 record highs.
On Friday, the Dow Jones industrial average rose 330.44 points, or 1.38 per cent, to 24,190.9, the S&P 500 gained 38.55 points, or 1.49 per cent, to 2,619.55 and the Nasdaq composite added 97.33 points, or 1.44 per cent, to 6,874.49.
The TSX closed down 13.08 points, or 0.21 per cent, at 15,034.53.
Signs mounted on Friday that jitters have spread to other assets, with measures of market unrest pushing higher in junk bonds, emerging-market equities and Treasuries. The Cboe Volatility index ended at 29, almost three times higher than its level Jan. 26.
The VIX's bond-market cousin reached its highest since April during the week, and a measure of currency volatility spiked to levels last seen almost a year ago.
In the Treasury market, yields spiked to a four-year high, raising concern the Federal Reserve would accelerate its rate-hike schedule. Ten-year yields ended the week at 2.85 per cent, near where they started, as Treasuries moved higher when equity selling reached its most frantic levels.
Canada's 10-year government bond followed a similar path and, by late day Friday, was yielding of 2.353 per cent, a nearly four-year high.
Traders are now focusing on next week's U.S. consumer-price data after a week in which the 10year yield pushed as high as 2.88 per cent. Equity investors took the signal to mean interest rates will rise as inflation gathers pace, denting earnings and consumers' spending power.
Europe and Asia weren't spared from the drama that's afflicted global stocks. The Stoxx Europe 600 Index clocked its worst week since 2016, losing almost half a year's gains. China's benchmark fell the most in almost two years earlier, while the MSCI World Index had its biggest weekly drop since 2016.
U.S. IPO postponements included a US$500-million listing of IPSCO Tubulars, the U.S. subsidiary of Russian oil-and-gas pipe maker TMK; the US$220-million flotation of Turkish fast-food chain operator TFI Tab Food Investments; and a US$130-million listing by Argentine biotechnology firm Bioceres.
with files from Bloomberg News and staff