Wall Street’s dip buying spree on Thursday was already wearing thin in the first half-hour of trading.
After the Dow spiked more than 400 points, it was up just 200 points, or 0.5%, shortly after 10 a.m. ET. The S&P 500 was up 0.5% and the Nasdaq Composite was up 0.6%.
Steep selloffs in recent years have generally led to buying opportunities, so it makes sense the stock market opened solidly higher in the wake of yesterday’s slide.
But the data this morning, including a revision higher to third-quarter gross domestic product and a pullback in weekly jobless claims, continue to feed into a strong economic picture in the U.S., according to Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management.
“Right now, the market is still digesting yesterday’s news that additional rate cuts are likely to be fewer and farther between next year,” Zentner writes. “If inflation remains sticky, it could add to pessimism about Fed policy.”
The tug of war between dip buyers and those worried about valuations headed into a politically volatile stretch will likely continue. We’ll see if the Dow can pick up the pace as the day rolls on, as things on Wall Street are set to calm down as the end of the year holiday break approaches.
A breakdown in a deal that would have averted a looming government shutdown may serve as a preview for the kind of political uncertainty that Wall Street will need to contend with in the coming year.