Trader Fred DeMarco works in a booth on the floor of the New York Stock Exchange, Wednesday, Jan. 2, 2019. Stock markets started the new year with a tumble, as disappointing Chinese economic data on Wednesday renewed concerns that a global trade war is weighing on growth. (AP Photo/Richard Drew)

Stocks waver after an early drop as markets stay volatile

January 02, 2019 - 1:19 pm

NEW YORK (AP) — The roller coaster ride on Wall Street resumed on Wednesday, the first trading day of the new year, as stocks plunged in the morning and then climbed their way back by midday.

The Dow Jones Industrial Average dropped as much as 398 points in the first few minutes of trading after more shaky economic news from China. But it soon recouped those losses and turned slightly higher.

About two-thirds of the stocks on the New York Stock Exchange were trading higher.

That kind of whiplash was typical during the last three months of 2018.

A Chinese government survey and one by a major business magazine showed manufacturing in China weakened in December as global and domestic demand cooled. That weighed on big exporters, with tech companies like Microsoft and industrials like Boeing taking sharp losses early on, only to bounce back later.

After gliding gently higher for years, propelled by rising corporate profits and extremely low interest rates from the Federal Reserve, stocks have been heaving up and down in recent months as a host of fears weigh on investors, including threats to global economic growth.

Many strategists on Wall Street expect the volatility to carry through the year.

Stocks are coming off their worst year in a decade, and many Americans could be in for a shock when they open their monthly and end-of-the-year 401(k) statements.

The benchmark S&P 500 fell 6 percent in 2018, its first substantial loss since 2008, and it has dropped almost 15 percent since late September. Many other stock indexes around the world fared even worse last year.

The U.S. economy has been expanding for almost a decade, and stocks have risen steadily over that time.

From September through the end of December, however, investors became more and more worried that challenges such as U.S.-China trade tensions, rising interest rates and political uncertainty could slow the economy and company profits, and possibly tip the U.S. economy and the global one into a recession.

Many Wall Street banks are forecasting a year of modest gains for stocks. But most also say that they expect these sharp reversals to continue as investors try to handicap so many unknowns.

Vinay Pande, head of trading strategies for UBS Global Wealth Management, said company earnings jumped in 2018 and are likely to keep improving.

As of early afternoon, the S&P 500 index had added 2 points, or 0.1 percent, to 2,509, while the Dow was at 23,329.

Most markets were closed on Tuesday for New Year's Day.

After sharp losses at the start of trading, benchmark U.S. crude jumped 4.3 percent to $47.34 per barrel in New York. Brent crude, used to price international oils, rose 3.6 percent to $55.74 per barrel in London. Oil prices have fallen about 40 percent since early October 2018 as investors reacted to the possibility of weaker demand for energy as economic growth slowed.

Prices on long-term government bonds rose, a sign investors were looking for safer options. The yield on the 10-year Treasury note fell to 2.67 percent from 2.69 percent.

Electric car maker Tesla sank after its fourth-quarter vehicle deliveries fell short of Wall Street projections. The company also said it is cutting the prices of its cars $2,000 to help customers handle the gradual phase-out of federal electric vehicle tax credits. The stock gave up 7.6 percent to $307.59.

Health care companies, the best-performing part of the market in 2018, fell Wednesday as drugmakers and insurers lost ground.

In other trading:

—The Nasdaq composite rose 25 points, or 0.4 percent, to 6,660. The technology-heavy Nasdaq did a bit better than the S&P 500 in 2018, but tech stocks have taken steep losses the last few months.

—The dollar fell to 109.45 yen from 109.61 yen. The euro fell to $1.1336 from $1.1445. The British pound slid to $1.2588 from $1.2752.

—France's CAC 40 fell 0.9 percent and the British FTSE 100 added 0.1 percent. Germany's DAX rose 0.2 percent. Hong Kong's Hang Seng tumbled 2.8 percent and Seoul's Kospi gave up 1.5 percent. Tokyo's markets were closed.

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Business Writer Stan Choe contributed to this story from New York.

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AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP

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