BOSTON (Reuters) – Investors could see a final boost to the Wall Street shares this year's last trading session on Monday, but they do not expect gains to offset losses in the worst of December since the 1930s.
Traders works on the floor of the New York Stock Exchange (NYSE) in New York, USA, on December 28, 2018. REUTERS / Jeenah Moon
"I think there is a chance that the market could rally at the end of the year," said Jake Dollarhide, CEO of Longbow Asset Management in Tulsa, Oklahoma.
The potential for positive news about a trade battle with China and the expectation of future comments from Federal Reserve chairman Jerome Powell could lift the market, Dollarhide said. Nevertheless, no matter how strong a potential rally is, the market is expected to remain uncomfortable.
"When you start going through December, and it's the worst of December since the Great Depression, it leaves a very strong lasting picture of how bad it has been," said Dollarhide. "There is no one to come around no matter how much we rally tomorrow."
Last week started with Wall Street's worst ever Christmas Eve, and pushed S&P 500 within a whisker on the bear market. Overall, the global MSCI index, the S & P 500, Dow and Nasdaq are on their way to their worst years since the 2008 financial crisis.
While consumption expenditure data has been strong, home data does not have and the market has been sawn due to political uncertainty and a US government termination.
"It's a pretty illiquid day Monday … so I don't think fireworks expectations are too high," says Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey. "I think you see a good balance now that buyers come into the market and give a more solid base and the potential for slightly upward."
US President Donald Trump has suggested that progress has been made in a trade dispute with China, which could increase stocks, said Meckler. In addition, strong consumer data from the Christmas expenses could support the market.
But after the violent swings this month, the last trading day is expected to be relatively subdued. Few companies make big announcements on the last day of the year, and trading volumes are expected to be light.
Disappointing economic data on Friday reinforced caution, including Japan's lowering of industrial output and retail, declining German inflation and US data for November, showing contracts for the purchase of previously owned homes unexpectedly.
Breaking with the bad news came the Chicago Purchasing Management Index ahead of consensus.
Large indices moved in and out of the positive area on Friday, with Dow and S & P finishing modestly lower, while Nasdaq oaked out a small gain.
"I think Friday's seal should be seen as very positive for bulls," says Oliver Pursche, board member of Bruderman Asset Management. But despite the revenue from significant losses in the session, Pursche said investors should be cautious in January. "Investors should expect continued upward and downward movement."