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Wall Street can win on Monday, but is unlikely to pay December losses

BOSTON (Reuters) – Investors may see the latest increase in Wall Street shares at the final trading session of the year on Monday, but they do not expect profits to make up for losses in the worst December since the 1930s.

Traders work on the site of the New York Stock Exchange (NYSE) in New York, USA, December 28, 2018. REUTERS / Jeenah Moon

“I think there is a chance that the market may grow by the end of the year,” said Jake Dollarhide, general director of Longbow Asset Management in Tulsa, Oklahoma.

According to Dollarhayd, the potential for positive news on a trade dispute with China and the expectation of forthcoming remarks by Federal Reserve Chairman Jerome Powell could raise the market. However, no matter how strong any potential rally is, it is expected that market concerns will continue.

“When you start going through December, and this is the worst December since the Great Depression, it leaves a very strong, stable view of how bad everything was,” said Dollarhide. "You can not get around this no matter how much we collect tomorrow."

Last week began with the worst fall on Christmas Eve on Wall Street, pushing the S & P 500 to the territory of the bear market. In general, the global MSCI, S & P 500, Dow and Nasdaq are in anticipation of the worst years since the 2008 financial crisis.

While consumer spending data was strong, housing data was not, and the market was visible due to political instability and the closure of the US government.

“It's a rather illiquid day on Monday … so I don’t think that the expectations of fireworks are too high,” said Rick Mekler, a partner at Cherry Lane Investments in New Vernon, New Jersey. “I think that now you see a good balance of customers who come to the market and provide a stronger base and potential for small growth.”

US President Donald Trump has suggested that progress has been made in a trade dispute with China that could increase stocks, Mekler said. In addition, strong consumer spending data on Christmas spending can support the market.

But after sharp fluctuations this month, the last trading day is expected to be relatively muffled. Few companies make large announcements on the last day of the year, and it is expected that trading volumes will be low.

The disappointing economic data on Friday increased caution, including a slowdown in industrial production in Japan and retail sales, a decline in inflation in Germany, as well as data for November, showing that contracts for the purchase of houses belonging earlier had unexpectedly dropped.

Having overcome the bad news, the Chicago Purchasing Management Index was ahead of the consensus.

On Friday, the major indices moved into the positive zone and left it, the Dow and S & P index fell slightly, while the Nasdaq showed a slight increase.

“I think Friday’s close should be seen as very positive for the bulls,” said Oliver Purche, member of the board of directors of Bruderman Asset Management. But, despite the turnaround from significant losses at the session, Purche said that investors should be careful in moving to January. "Investors should expect continued large-scale movements up and down."

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