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US Stocks Recover after Four Days of Losses

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US stock futures edged higher on Wednesday, suggesting a slight calm after a few grueling sessions that left the benchmark S&P 500 close to bear market territory due to concerns over sluggish growth and the recent spat in the White House.

Reopening after the Christmas holiday, S&P 500 e-minis gained 1.5 percent to $2,377.12. Dow e-minis advanced 1.1 percent to $21,948.0 and Nasdaq 100 e-minis added 2.1 percent to $6,019.00.

A four-day decline saw the S&P 500 end Monday at a 20-month low and 19.8 lower than its closing high, just a tad above the 20-percent threshold regularly used to determined a bear market.

The Dow Jones Industrial Average (DJI) is 18.9 percent away from that level, while the Nasdaq is closing the distance with each day’s losses.

The S&P and the Dow have shed around 12 percent for the year, while the Nasdaq has slipped 10 percent, with four more trading sessions left to bring 2018 to a close.

US Political Turmoil further Unnerving Investors

The partial US government shutdown had further spooked investors, entered the fifth day. President Donald Trump stated on Tuesday that the shutdown will last until his financial demand for the construction of a wall on the US-Mexico border is met.

The political impasse over the wall funds and the recent abrupt departure of the US defense chief have added to investor concerns over US-China trade tensions and other geopolitical events, limiting global expansion and corporate earnings.

Trump on Tuesday also reiterated that the US Federal Reserve was hiking interest rates too fast, holding the central bank responsible for the economic headwinds.

A US media company had reported that Trump had discussed dismissing Federal Reserve Chairman Jerome Powell, whom he appointed, out of frustration over the interest rate hikes.

US Treasury Secretary Steven Mnuchin on Monday had talked to US regulators regarding the decline in US stock markets, although it did little to ease investor worries.

In addition to concerns toward the US economy, the markets are now having to grapple with growing turmoil in the White House which has raised political risk ahead of the year-end, said Senior Strategist Masahiro Ichikawa.

The recent sell-off has pushed all the 11 main S&P sectors into the red territory for the year, and about three-fourths of the S&P 500 equities are bearish.

However, with US stocks’ decade-long bullish run at risk, Trump sees an opportunity for investors, stating that US companies are the greatest in the world and a tumble in stock prices suggested a tremendous buying opportunity.

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