Wall St bounces off lows late as growth fears persist, safe-havens gain
NEW YORK, May 20- U.S. shares were mixed late on Thursday as bargain hunters emerged in late trading after investors dumped stocks on fears of sluggish growth and bought safe-haven assets such as government debt and the Swiss franc.
Supply chain woes continued to fuel inflation and growth concerns as Cisco Systems Inc (CSCO.O) warned of persistent component shortages, knocking its shares down 13.4%. read more
Data showed factory output in the U.S. Mid-Atlantic region decelerated far more than expected in May with the business outlook for the six months ahead the weakest in more than 13 years, a regional Federal Reserve bank survey said. read more
Toward the close, some megacap growth stocks that have badly underperformed this year made gains. The Dow Jones Industrial Average (.DJI) fell 0.2%, the S&P 500 (.SPX) gained 0.07% and the Nasdaq Composite (.IXIC) added 0.56%.
Big slides for Walmart on Tuesday and Target on Wednesday had investors demoralized and wondering about higher costs across the supply chain, said Michael James, managing director of equity trading at Wedbush Securities.
"You got a pretty severe shock to the system for portfolio managers with the combination of those two," James said. "That type of damage is hard to repair, piled on top of the extremely challenging year that technology investors have had," he said.
"On the other hand, you'll get trading optimists who view things have gotten extremely oversold and with the Nasdaq down 27% coming into today, you're due for some kind of a bounce."
Traders are looking for a catalyst that will turn the market around as a near-term bottom approaches, said Rick Meckler, president of hedge fund LibertyView Capital Management LLC.
But, 'there's probably still enough fear among investors to see a few more downdrafts," Meckler said.
Cash hoarding has reached the highest level since September 2001, indicating strong bearish sentiment, according to Louise Dudley, a portfolio manager at Federated Hermes Ltd.
Goldman Sachs estimates a 35% probability of a U.S. recession in the next two years, while Morgan Stanley's sees a 25% chance of one in the next 12 months.
U.S. spot power and natural gas prices soared to their highest in over a year in some U.S. regions as Americans cranked up air conditioners during a spring heatwave. read more
MSCI's gauge of stocks across the globe (.MIWD00000PUS) shed 0.18% and the pan-European STOXX 600 index (.STOXX) closed down a preliminary 1.37%.
Asia-Pacific shares ex-Japan (.MIAPJ0000PUS) snapped four days of gains to wilt 1.8%, dragged down by a 1.65% loss for Australia's resource-heavy index (.AXJO), a 2.5% drop in Hong Kong (.HSI). Tokyo's Nikkei (.N225) shed 1.9%.
Germany's 10-year bond yield fell below 1% and U.S. Treasury yields fell as more soft U.S. economic data stirred worries the Federal Reserve's aggressive monetary tightening could hurt the global economy.
The yield on 10-year Treasury notes fell 3.8 basis points to 2.846%, after hitting a three-week low of 2.772%.
The dollar fell across the board, pulling back further from a two-decade high, as most other major currencies drew buyers.
The dollar index fell 1.021%, with the euro up 1.21% to $1.0593. The Japanese yen strengthened 0.38% to 127.71 per dollar.
REUTERS
