The end of 2018 seemed to signal good things to come for America’s farmers. Fresh off the passage of the farm bill, which reauthorized agriculture, conservation and safety net programs, the Agriculture Department last week announced a second round of direct payments to growers hardest hit by President Donald Trump’s trade war with China.

Then parts of the government shut down.

The USDA in a statement issued last week assured farmers that checks would continue to go out during the first week of the shutdown. But direct payments for farmers who haven’t certified production, as well as farm loans and disaster assistance programs, will be put on hold beginning next week, and won’t start up again until the government reopens.

There is little chance of the government shutdown ending soon. Trump and Congress are no closer to reaching a deal over his demand for border wall money, and both sides say the impasse could drag well into January.

Although certain vital USDA programs will remain operational in the short term, that could change if the shutdown lasts for more than a few weeks.

The Supplemental Nutrition Assistance Program, or food stamps, helps feed roughly 40 million Americans. According to the USDA, eligible recipients are guaranteed benefits through January. Other feeding programs, including WIC, which provides food aid and nutrition counseling for pregnant women, new mothers and children, and food distribution programs on Indian reservations, will continue on a local level, but additional federal funding won’t be provided. School lunch programs will continue through February.

USDA has earmarked about $9.5 billion in direct payments for growers of soybeans, corn, wheat, sorghum and other commodities most affected by tariffs. The first round of payments went out in September. The deadline to sign up for the second round of payments is January 15.

The impact of the shutdown, which began shortly before most federal workers were scheduled for a holiday break, started coming into focus by midweek.

About 420,000 employees are working without pay, while 380,000 are being forced to stay home. In the past, federal employees have been paid retroactively. But government contractors won’t get paid for hours they’ll lose staying home, causing problems for those who rely on hourly wages.

In anticipation of the financial bind many federal workers and contractors may soon find themselves in, the Office of Personnel Management offered some advice: haggle with landlords, creditors and mortgage companies for lower payments until the shutdown is over.

The shutdown also is affecting national parks, although unevenly: Some remain accessible with bare-bones staffing levels, some are operating with money from states or charitable groups, while others are locked off.

 
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The storm winds of the recent trade war between the United States and China have settled in a truce for now, but the weeks of agitation — of rising tariffs and counter duties — battered one economy close to Beijing: Hong Kong’s.

In December, Hong Kong government economist Andrew Au said he anticipated near-term troubles for the territory’s economic forecast. GDP growth — a year after a record high of 341.5 billion — slowed significantly, from 4.6 percent growth in the first quarter to 2.9 percent in the third.

The government says the impact of the trade war can be seen in consumer prices, slower spending and lighter trade. Consumer price inflation ticked up 2.8 percent in the third quarter. The government warned that inflation could head upward as local costs rise along with residential rental rates.

Kelvin Ho-Por Lam, a former economist with HSBC based in Hong Kong, predicted another problem for Hong Kong from overseas.

Double whammy

“It’s not just the trade war, it’s facing a double whammy at the moment,” Lam said. “The trade war impacts on this economy, which is showing up in this Hong Kong GDP over the last two quarters. The second impact is from rising interest rates in the U.S.” The Federal Reserve raised rates four times in 12 months. A slower U.S. economy means less buying from China.

Adding to the impact is great unease. 

“It poses uncertainty on the economic agents in society. Businesses are more concerned going ahead with their investment plans,” Lam said. “They’re shelving their investments and therefore they are not investing in capacity in Hong Kong or in China.”

Trade and logistics — the apparatus to move the shoes and dresses and smartphones from Chinese factories to markets worldwide — are central to Hong Kong’s economy. The sector accounts for nearly one-fifth of the city’s GDP, higher than the substantial financial and banking industry here. When tariffs hit, goods cost more to sell in the United States, which means companies decrease stock and consumers buy less.

China’s economic growth weakened in the third quarter from a year earlier, its lowest expansion since the global financial crisis in 2008.

Consumers wary

Clearly consumers are wary. Retail sales in Hong Kong, the semi-autonomous Chinese territory, grew in September at their slowest pace in 15 months. Also hurting the city was substantial damage from typhoon Mangkhut.

Favorite shops of mainland tourists — Sa Sa International, Chow Tai Food Jewelry, and Luk Fook Holdings, all posted slowed sales in the third quarter.

Hong Kong also saw its economy lag for local reasons. Home prices in what is often called the world’s least affordable market chilled this year as interest rates rose. The number of residential property transactions fell by 24 percent from 18,900 in the second quarter to 14,400 in the third quarter, according to the government.

Property sellers saw the slowdown in sales set in this summer, after the residential property market had churned hard for 28 consecutive months. Median home prices dropped by as much as 5 percent from June, agents told the South China Morning Post in October. The city’s rating and valuation Index, which tracks prices of older homes, in August marked the first monthly decline in more than two years. Even the government offered discounts. A 97,300-square-foot plot of the former Kai Tak airport in the city’s Kowloon district sold for $1.03 billion to a unit of China Overseas Land & Investment, nearly 13 percent lower than another Kai Tak sale in November.

The market chill began in August after Carrie Lam, Hong Kong’s chief executive, introduced a tax to compel developers to create more housing. Meanwhile, banks raised mortgage rates for the first time in 12 years.

That means mortgage holders have less extra money to spend, Kelvin Lam said. He forecast that there will be fewer tourists visiting Hong Kong, perhaps because of the volatility in China.

“The Hong Kong economy is very sensitive to these things,” he said. “It will reduce people spending for their own personal consumption.”

​Folded into China’s economy

Hong Kong produces very little domestically, Kelvin Lam pointed out. Lam said because the territory’s economy is so entwined with China’s, and because the range of products and services are so narrow, the impact of the extra tariffs will be felt on whatever the city acquires from China and re-exports.

Hong Kong is likely to suffer more during China’s downturns as the former British colony is folded into China’s economy and as the government plans for a massive technology hub to be rooted in nearby Shenzhen.

Andrew Sheng, a distinguished fellow at the Asia Global Institute at the University of Hong Kong, wrote in an email that he didn’t think the city would encounter much inflation, despite the downward pressure coming from lower property prices and a slowing global economy.

“The Hong Kong economy will suffer from the trade conflict,” said the former central banker and financial regulator in Asia. “Although it is very resilient to overseas shocks.”
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Wall Street capped a week of volatile trading Friday with an uneven finish and the market’s first weekly gain since November. 

Losses in technology, energy and industrial stocks outweighed gains in retailers and other consumer-focused companies. Stocks spent much of the day wavering between small gains and losses, ultimately unable to maintain the momentum from a two-day winning streak. 

Even so, the major stock indexes closed with their first weekly gain in what’s been an otherwise painful last month of the year. The Dow Jones industrial average and S&P 500 rose more than 2 percent for the week, while the Nasdaq added nearly 4 percent. The indexes are still all down around 10 percent for the month and on track for their worst December since 1931. 

“It seems like convulsions in either direction have been the real norm for much of December and that’s certainly been the case this week,” said Eric Wiegand, senior portfolio manager for Private Wealth Management at U.S. Bank. “The initial push higher and then seeing it subside a little bit is perhaps getting back to a little bit more of a normal environment, reflecting the reality that we have still a number of issues overhanging the market.” 

The market’s sharp downturn since October has intensified this month, erasing all its 2018 gains and nudging the S&P 500 closer to its worst year since 2008. 

Investors have grown worried that the testy U.S.-China trade dispute and higher interest rates would slow the economy, hurting corporate profits. This week, with trading volumes lower than usual because of the Christmas holiday, served up some pronounced swings in the market. 

A steep sell-off during the shortened trading session on Christmas Eve left the major indexes down more than 2 percent. On Wednesday, stocks mounted a stunning rebound, posting the market’s best day in 10 years as the Dow shot up more than 1,000 points for its biggest single-day point gain ever. 

Late reversal

The market appeared ready to give much of those gains back on Thursday, before a late-afternoon reversal that erased a 600-point drop in the Dow left the market with a two-day winning streak. 

“The market was so oversold and then Wednesday and Thursday were key reversal days, but also stronger closes than opens,” said Janet Johnston, portfolio manager at TrimTabs Asset Management. 

“The market was starting to price in the worst-case scenario: a recession,” Johnston said 

Still, the market’s downturn has left stocks substantially less expensive than they were heading into the fourth quarter, Johnston noted. 

“And that sets up a good buying opportunity,” she said. 

On Friday, the S&P 500 index fell 3.09 points, or 0.1 percent, to 2,485.74. The Dow Jones industrial average dropped 76.42 points, or 0.3 percent, to 23,062.40. The average had briefly climbed to 243 points. 

The Nasdaq added 5.03 points, or 0.1 percent, to 6,584.52. The Russell 2000 index of smaller-company stocks climbed 6.11 points, or 0.5 percent, to  1,337.92. 

Technology companies, a big driver of the market’s gains before things deteriorated in October, were among the big decliners. Alliance Data Systems dropped 1.4 percent to $149.82. 

Oil prices recovered after wavering in midmorning trading. Benchmark U.S. crude rose 1.6 percent to settle at $45.33 a barrel in New York. Brent crude, used to price international oils, inched up 0.1 percent to close at $52.20 a barrel in London. 

Despite the rise in oil prices, energy sector stocks declined. Cabot Oil & Gas slid 3.5 percent to $22.95, while Hess lost 2.8 percent to $40.38. 

Retailers and other consumer-focused companies fared better. Amazon rose 1.1 percent to $1,478.02. 

Wells Fargo settlement

Wells Fargo rose 0.5 percent to $45.78 on news that the lender has agreed to pay $575 million in a national settlement with state attorneys general over its fake bank accounts scandal. The San Francisco-based bank has acknowledged that its employees opened millions of unauthorized bank accounts for customers in order to meet unrealistic sales goals. 

Tesla climbed 5.6 percent to $333.87 after naming two independent directors to its board under an agreement with federal regulators. 

Homebuilders fell broadly in the morning after the National Association of Realtors said its pending home sales index fell last month as fewer Americans signed contracts to buy homes. Higher mortgage rates and prices are squeezing would-be buyers out of the market, especially in the West. The stocks mostly recovered by midafternoon. William Lyon Homes gained 3.4 percent to $10.81. 

Bond prices recovered after a midday dip, sending the yield on the 10-year Treasury down to 2.72 percent from 2.74 percent late Thursday. 

The dollar declined to 110.41 yen from Thursday’s 110.74 yen. The euro weakened to $1.1442 from $1.1449. 

Gold edged up 0.1 percent to $1,283 an ounce and silver gained 0.8 percent to $15.44 an ounce. Copper rose 0.5 percent to $2.68 a pound. 

Overseas, major indexes in Europe closed higher while markets in Asia mostly rose. London’s FTSE 100 gained 2.3 percent, while the Nikkei 225 index fell 0.3 percent.  
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Wells Fargo agreed to a $575 million nationwide settlement over its opening of millions of unauthorized customer accounts and other alleged predatory practices, the bank and U.S. authorities announced Friday.

The agreement between the bank and attorneys general from the 50 states plus the District of Columbia covers a series of scandals that have dogged the big U.S. bank since 2016, when it was fined $185 million by U.S. regulators over its so-called fake accounts scandal.

Wells Fargo, which replaced its chief executive and overhauled its system for compensating staff in the wake of the debacle, said the deal “underscores our serious commitment to making things right in regard to past issues as we work to build a better bank.”

In addition to the payments, the San Francisco-based bank agreed to maintain a dedicated team and website to help consumers work through the problem and to periodically report to the states on the status of remediation efforts.

The agreement will help address conduct that was “unlawful and disgraceful,” said California Attorney General Xavier Becerra, whose state will receive $148.7 million, by the far the largest settlement.

“Instead of safeguarding its customers, Wells Fargo exploited them, signing them up for products — from bank accounts to insurance — that they never wanted,” Becerra said.

“This is an incredible breach of trust that threatens not only the customers who depended on Wells Fargo, but confidence in our banking system.”

Wells Fargo has identified some 3.5 million accounts and 528,000 online bill-pay enrollments that may have not been authorized by customers, according to allegations listed in the settlement.

Other alleged violations short-changed consumers on auto insurance, mortgage rates and collateral protection insurance.
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In South Korea’s largest shipyard, thousands of workers in yellow hard hats move ceaselessly between towering cranes lifting hulks of steel. They look like a hive of bees scurrying over a massive circuit board as they weld together the latest additions to the rapidly growing fleet of tankers carrying super-chilled liquefied natural gas across the world’s oceans. 

The boom in fossil-fuel production in the United States has been matched by a rush on the other side of the Pacific to build the infrastructure needed to respond to the seemingly unquenchable thirst for energy among Asia’s top economies. When Congress lifted restrictions on shipping crude oil overseas in 2015, soon after the Obama administration opened the doors for international sales of natural gas, even the most boosterish of Texas oil men wouldn’t have predicted the U.S. could become one of the world’s biggest fossil-fuel exporters so quickly.  

Climate experts say there is little doubt increased American production and exports are contributing to the recent rise in planet-warming carbon emissions by helping keep crude prices low, increasing consumption in developing economies.  

Better than dirtier fuel, some say

Backers of U.S. exports of liquefied natural gas, or LNG, argue that the boom will produce environmental benefits because it will help China and other industrial nations wean themselves from coal and other dirtier fossil fuels. 

Environmentalists counter that the massive new supplies unleashed by American advances in extracting natural gas from shale doesn’t just make coal-fired power plants less competitive. LNG also competes with such zero-carbon sources of electricity as nuclear, solar and wind — potentially delaying the full adoption of greener sources. That’s time climate scientists and researchers say the world doesn’t have if humans hope to mitigate the worst-case consequences of our carbon emissions, including catastrophic sea-level rise, stronger storms and more wildfires.  

“Typically, infrastructure has multi-decadal lifespans,” said Katharine Hayhoe, a climate scientist and director of the Climate Science Center at Texas Tech University. “So, if we build a natural-gas plant today, that will impact carbon emissions over decades to come. So those are the critical and crucial decisions that are being made today. Do we increase access to and use of fossil fuels, or do we make decisions that limit and eventually reduce access to fossil fuels?”  

Boon to shipyards

While it is difficult to estimate how much America’s rise as major exporter of fossil fuels is contributing to a hotter climate, some of the economic benefits are plain to see in South Korea’s shipyards. 

At the sprawling Daewoo Shipbuilding and Marine Engineering facility on the island of Geoje, more than half of the 35 vessels scheduled for delivery in 2018 were LNG carriers. A similar number of vessels are lined up for completion next year. 

It’s the same story at the two other major Korean yards. The construction of the big gas tankers has been credited with lifting the nation’s shipbuilding sector out of the doldrums from a decade ago, when the Great Recession caused a downturn in transoceanic trade.  

South Korea’s big three shipbuilders — Daewoo, Hyundai Heavy Industries and Samsung Heavy Industries — won orders for 53 new LNG carriers in 2018 at about $200 million each, soaking up the lion’s share of the 62 vessels ordered globally, according to numbers compiled by the London-based shipping group Clarkson Research. South Korea is expected to finish 2018 at the top spot in overall orders for new commercial ships, surpassing China for the first time in seven years. 

“We are getting out of a long tunnel,” Song Ha-dong, a senior Daewoo executive, said as he surveyed the company’s 1,200-acre yard from above the British Contributor, a gargantuan LNG carrier with a freshly painted deck covered in a maze of pipes. “The U.S.-led shale gas boom is getting fully under way, and China, Japan and South Korea are increasing their consumption of natural gas.”  

During a recent visit by The Associated Press, three of the LNG carriers were being assembled inside a massive dry dock. Another 13, including the British Contributor, had been floated out to nearby berths where workers were putting on finishing touches.  

The Korean shipyards have developed a niche in building ships with the complex systems needed to transport natural gas. The gas is compressed and liquefied for storage by keeping it really cold, about -260 Fahrenheit. In this liquid state, natural gas is about 600 times smaller than at room temperature. 

Top three importers

The British Contributor is as long as three football fields and can carry enough liquefied gas to fill about 70 Olympic-sized swimming pools — nearly two days’ national supply for South Korea. The country used about 1.9 trillion cubic feet of LNG in 2017, finishing third behind China and Japan as the world’s biggest importers, according to data from the U.S. Energy Information Administration. 

With no domestic oil and gas resources and an unfriendly neighbor blocking overland shipments from the north, South Korea relies exclusively on oceangoing tankers. Nearly half of South Korea’s gas imports come from Qatar and Australia, but the share shipped from the U.S. is growing fast as additional export terminals along the Gulf coast are coming online to handle the glut of gas unleashed by hydraulic fracturing in the Permian Basin of West Texas and southeastern New Mexico. 

U.S. LNG exports quadrupled in 2017, with this year on track to see similarly exponential growth. Nearly a fifth of all that gas goes to South Korea.  

The British Contributor is the third of six LNG carriers being built by Daewoo for British energy giant BP, which will mainly use them to transport U.S. gas to Asia under a 20-year contract with the Freeport LNG facility south of Houston. Daewoo delivered four similar ships this year to the government-owned Korea Gas Corporation, which has a 20-year deal to buy gas exported from Cheniere Energy’s Sabine Pass LNG terminal in Louisiana. 

South Korea has been vying with Mexico for the title of the largest importer of U.S. LNG, and its reliance on gas could further increase under the government of President Moon Jae-in, who has pledged to transition his country away from nuclear power following the Fukushima meltdown in Japan.  

Park Moo-hyun, a senior analyst at Hana Financial Investment, predicts shipping companies will need to place orders for around 480 new LNG carriers over the next decade to match the U.S.-driven increase in global LNG trade — roughly doubling the current worldwide fleet. 

“The impact brought by the emergence of shale is not just about an increase in U.S. energy exports — there has been tremendous growth in the production of energy sources that hadn’t been used much, such as LNG,” Park said. “Once the groundwork is established for the stable use of these new energy sources, industries are pushed to adapt.” 

Natural gas has the added appeal of producing about half the carbon dioxide of coal when it’s burned. Its increased adoption for generating electricity has been pitched by the U.S. and others as a way for nations to make progress toward meeting their emissions reductions goals under the 2015 Paris climate accord. Burning gas also creates less particulate pollution. 

In China, the Communist government has declared a “Blue Sky Defense War” to reduce the choking smog in Beijing and two dozen surrounding cities with a program to convert hundreds of thousands of homes and industrial facilities from burning coal to gas.  In February, Texas-based Cheniere signed a 25-year deal with the state-controlled China National Petroleum Corporation to export LNG from its export terminal in Corpus Christi. 

Carbon emissions increase

But the increased gas exports from the U.S. and other sources hasn’t really put much of dent in Chinese coal consumption, which has remained largely flat in 2018. Overall carbon emissions for China, the globe’s biggest emitter, increased nearly 5 percent in 2018.  

Daniel Raimi, a researcher at the Washington-based think tank Resources for the Future, said determining whether U.S. gas exports are a net good or bad for the climate is difficult. When considering China, researchers can’t just look at whether coal use or carbon emissions are falling. They must also try to calculate how much more coal would have been burned had ample supplies of gas not been available. 

Another challenge is that the primary component of natural gas is methane, a potent greenhouse gas that traps far more heat in the atmosphere than a comparable amount of carbon dioxide. Studies have shown that a significant amount of natural gas leaks into the air at almost every stage of its production and transport — from wells to pipelines, processing facilities to ships. Raimi said the impact of all that leaking methane on the climate is roughly 84 times more powerful than the same amount of carbon dioxide over a 20-year time frame. 

As part of its broad rollback of environmental rules, the Trump administration moved in September to weaken Obama-era regulations designed to prevent methane from escaping into the atmosphere during oil and gas operations. The regulatory rollbacks are part of President Donald Trump’s pro-industry “Energy Dominance” strategy to ramp up U.S. fossil fuel production without concern for the corresponding increase in greenhouse gas emissions. Trump has falsely claimed climate change is a “hoax,” and he moved in 2017 to pull the United States out of the 2015 Paris accord. 

“With or without increased U.S. oil and gas exports, ambitious policy measures are the essential ingredient to achieving long-term climate goals such as those laid out in the 2015 Paris Agreement,” Raimi said. “For U.S. LNG exports to reduce global emissions, they must primarily displace coal, and methane emissions must be limited both domestically and abroad.” 
…

Wall Street stocks finished solidly higher Thursday following a late-afternoon surge as worries over slowing economic growth gave way to bargain-hunting.

The Dow Jones Industrial Average finished at 23,138.82, an increase of 1.1 percent and up some 870 points from the low point of the session.

The broad-based S&P 500 climbed 0.9 percent to 2,488.83, while the tech-rich Nasdaq Composite Index advanced 0.4 percent to 6,579.49.

The push into positive territory came in the final 30 minutes of the session. While trading is usually light during Christmas week, data has suggested volumes more in line with non-holiday sessions.
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Tesla Inc has registered a financial leasing company in China, a local business registration filing shows, in the latest sign the U.S. electric car maker is attempting to speed up its push into China.

The California-based carmaker, led by billionaire Chief Executive Elon Musk, has opened a wholly-owned financial leasing unit in Shanghai’s free trade zone with registered capital of $30 million, according to China’s National Enterprise Information Publicity System.

Its scope includes leasing and consultancy, the document said, which listed the firm’s legal representative as Zhu Xiaotong, Tesla’s boss in China.

Tesla declined to comment.

The company has opened a tender process to build its Shanghai Gigafactory and at least one contractor has started buying materials, Reuters reported earlier this month.

The $2 billion factory, Tesla’s first in China, marks a major bet by the U.S. electric vehicle (EV) maker as it looks to bolster its presence in the world’s biggest auto market where it faces rising competition from a swathe of domestic EV makers and its earnings have been hit by increased tariffs on U.S. imports.
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Retail sales in the U.S. for the 2018 holiday season were up more than 5 percent to more than $850 billion, according to data Mastercard released Wednesday, making 2018 the best holiday retail season in the last six years.

The Mastercard SpendingPulse report tracks retail spending across all payment types, including cash and checks, from Nov. 1 through Dec. 24.

The report said online sales also jumped more than 19 percent from last year.

Clothing and home improvement items were the seasonal favorite, while the sale of electronics fell.

The National Retail Federation had predicted holiday sales to increase between 4.3 and 4.8 percent from 2017, for a total of $717.45 billion to $720.89 billion.

Online giant Amazon said 2018 was a record year for its global holiday sales. Amazon said it shipped a billion products for free in the U.S. alone for its Amazon Prime customers.
…

A U.S. trade delegation will go to China the week of Jan. 7, Bloomberg reported Wednesday, citing two people familiar with the matter.

It will be the first time the two sides will meet face to face since U.S. President Donald Trump and China’s Xi Jinping agreed to de-escalate a trade war during a meeting in Argentina on Dec. 1.

The U.S. team will be led by Deputy Trade Representative Jeffrey Gerrish and will include David Malpass, Treasury undersecretary for international affairs, Bloomberg said. 

For months, the U.S. and China have engaged in tit-for-tat increases in tariffs on hundreds of billions of dollars’ worth of exports flowing between the two countries. 

At the meeting in Buenos Aires, the two leaders agreed to a 90-day truce in the trade war between the world’s two largest economies.

Trump also agreed to leave the tariffs on $200 billion worth of Chinese products at 10 percent, and not raise them to 25 percent on Jan. 1 as he had threatened.

Trump said his agreement with Xi would go down “as one of the largest deals ever made. … And it’ll have an incredibly positive impact on farming, meaning agriculture, industrial products, computers — every type of product.”

Trump and Xi also agreed to immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, nontariff barriers, cyber intrusions and cyber theft, services and agriculture. 

U.S. Trade Representative Robert Lighthizer, who was put in charge of the China talks, said the negotiations would not be extended beyond the 90-day deadline. He said that March 1 was a “hard deadline” that was endorsed by Trump, Bloomberg reported.

Lighthizer will not be part of the team going to Beijing.
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Wall Street notched its best day in 10 years as stocks rallied back Wednesday, giving some post-Christmas hope to a market that has otherwise been battered this December.

The Dow Jones Industrial Average jumped more than 1,000 points — its biggest point-gain ever — rising nearly 5 percent as investors returned from a holiday break. The benchmark S&P 500 index also gained 5 percent and the technology heavy Nasdaq rose 5.8 percent.

But even with the rally, the market remains on track for its worst December since 1931, during the depths of the Great Depression, and to finish 2018 with its steepest losses in a decade.

Technology companies, health care stocks, banks drove much of the broad rally. Retailers also were big gainers, as traders cheered a healthy holiday shopping season marked by robust consumer spending. Amazon had its biggest gain in more than a year.

But what really might have pushed stocks over the top was a signal from Washington that President Donald Trump would not try to oust the chairman of the Federal Reserve.

On Monday, Trump tweeted another critical volley about the central bank’s policy, rattling markets over the possibility the White House might interfere with the traditionally independent Federal Reserve. But in an interview with The Wall Street Journal published Wednesday, a White House economic adviser said that Fed chairman Jerome Powell is in no danger of being fired.

Energy stock jump

Energy stocks also rebounded as the price of U.S. crude oil notched its biggest one-day gain in more than two years.

All told, the S&P 500 index rose 116.60 points, or 5 percent, to 2,467.70. The Dow soared 1,086.25 points, or 5 percent, to 22,878.45. The tech-heavy Nasdaq gained 361.44 points, or 5.8 percent, to 6,554.36. The Russell 2000 index of smaller-company stocks picked up 62.89 points, or 5 percent, 1,329.81.

Trading volume was lighter than usual following the Christmas holiday. Markets in Europe, Hong Kong and Australia were closed.

“The real question is do we have follow-through for the rest of this week,” said Sam Stovall, chief investment strategist for CFRA.

Wednesday’s gains pulled the S&P 500 back from the brink of what Wall Street calls a bear market — a 20 percent tumble from an index’s peak. A further stumble would have marked the end to the longest bull market for stocks in modern history after nearly 10 years. The index is now down 15.8 percent since its all-time high September 20.

Powell’s position is safe

Stocks fell sharply Monday after Trump lashed out at the central bank. Administration officials had spent the weekend trying to assure financial markets that Fed chairman Jerome Powell’s job was safe. On Tuesday, Trump reiterated his view that the Federal Reserve is raising interest rates too fast, but called the independent agency’s rate hikes a “form of safety” for an economy doing well.

On Wednesday, Kevin Hassett, chairman of the White House Council of Economic Advisers, weighed in, saying Powell is in no danger of being fired, The Wall Street Journal reported.

The lackluster finish to 2018 comes as most economists expect growth to slow in 2019, though not by enough to slide into a full-blown recession. Many economic barometers still look encouraging. Unemployment is at 3.7 percent, the lowest since 1969. Inflation is tame. Pay growth has picked up. Consumers boosted their spending this holiday season.

Even so, traders have been jittery this autumn over signs that the global economy is slowing, the escalating U.S. trade dispute with China and another interest rate increase by the Fed. Many investors are growing worried that corporate profits — which drive stock market gains — are poised to weaken.

Thumps need a ‘vacation’

Some of what Wall Street sees coming out of the White House has added to the market’s uncertainty, specifically the president’s attacks on the Fed and remarks about the ongoing trade conflict with China.

The president could help restore some stability to the market if he “gives his thumbs a vacation,” Stovall said.

“Tweet things that are more constructive in terms of working out an agreement with Democrats and with China. And then just remain silent as it relates to the Fed,” Stovall said.

The partial U.S. government shutdown that started Saturday is unlikely to hurt the economy much, although it may deprive the financial markets of data about international trade and gross domestic product. The Bureau of Economic Analysis said Wednesday that it’s required to suspend all operations until Congress approves funding, which means that the government might not release its fourth-quarter report on gross domestic product as scheduled for January 30.

Technology stocks accounted for much of Monday’s early bounce. Adobe rose 8.7 percent to $222.95. Payment processors Visa and Mastercard also headed higher. Visa added 7 percent to $130.23, while Mastercard gained 6.7 percent to $186.43.

Big retailers were among the gainers. Amazon climbed 9.4 percent to $1,470.90. Kohl’s gained 10.3 percent to $65.92. Nordstrom picked up 5.8 percent to $46.75.

Homebuilders mostly rebounded after an early slide following a report indicating that annual U.S. home price growth slowed in October. PulteGroup climbed 4.7 percent to $25.85.

U.S. crude climbs

Benchmark U.S. crude climbed 8.7 percent to settle at $46.22 a barrel in New York. Brent crude, used to price international oils, gained 7.9 percent to $54.47 a barrel in London.

The pickup in oil prices helped boost energy stocks. Marathon Petroleum rose 4.8 percent to $56.93.

Bond prices fell. The yield on the 10-year Treasury note rose to 2.79 percent from 2.75 percent late Monday.

The dollar strengthened to 111.36 yen from 110.41 yen on Monday. The euro weakened to $1.1351 from $1.1404.

Gold edged up 0.1 percent to $1,273 an ounce and silver gained 2 percent to $15.12 an ounce. Copper gained 1.5 percent to $2.70 a pound.

Around the world

In other trading Wednesday, South Korea’s Kospi gave up 1.3 percent, while Japan’s Nikkei 225 index, which plunged 5 percent on Tuesday, picked up 0.9 percent. Shares fell in Taiwan, Singapore and Indonesia, but rose in Thailand.
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