Stocks bounce at the end of an terrible week

Dow Jones is expected to open down

Dow Jones is expected to open down

The drop of almost 5% over the week took it below 7,100 to its lowest level since December 2016.

When oil prices fall, the loonie typically follows suit, especially against the greenback as oil prices are denominated in USA dollars.

Nicholas Colas, co-founder of DataTrek Research, doesn't think the sell-off will end until bond yields fall sharply. But stock prices have climbed faster than profits in recent years. That's also a big change: The market has been stable in the a year ago because every time it inched lower, investors swooped in looking for bargains and soon sent them higher again.

From that standpoint, it's like the stock market just went on sale.

The Cboe Volatility Index rose again on Thursday to as high as 34.54, which is more than twice as high as its recent, unprecedented lows, having suffered its biggest-ever one-day spike on Monday. At its height, the Dow around 500 points into positive territory, a thousand points up from its low.

The market meltdown is a signal that bad times lie ahead but it seems as if nobody is paying attention. That hasn't stopped the market from rising steadily over time.

"At this point, I don't see any of the movements in asset prices of late to fundamentally change my view of the economy", John Williams, president of the Federal Reserve Bank of San Francisco, told reporters after a speech in Hawaii. "The Canadian index is probably likely to take longer to rebound than the USA indices will, just given that the risk that NAFTA is going to be abolished seems to be increasing with time rather than decreasing".

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The Dow Jones Industrial Average temporarily dropped more than 500 points after shares were sold across the board on concerns about rising long-term interest rates.

A Toronto Stock Exchange ticker is seen at The Exchange Tower in Toronto on Thursday, August 18 2011.

Edward Glossop, an emerging market economist at Capital Economics, said the drop isn't anything to be concerned about following a long-running rally. Committing regular amounts of money every month also lets you benefit if downturns last a while before a recovery kicks in.

The Canadian dollar tends to move on several types of data - particularly commodity prices, which also saw their fortunes reversed this week by the heightened levels of volatility in the market place.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary created to help people take control of their financial lives.

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. "They could be in full panic mode right now".

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