The Hong Kong Flu may not be a 24-hour bug.
While Hong Kong markets rebounded Friday from Thursday’s massive sell-off, the recovery was unconvincing in many other major global markets, where early gains faded during the day.
With U.S. stocks down from record heights but still up nearly 20 percent for the year, Wall Street has hardly been brought to its knees. But the rapid spread of the stock shock demonstrates the delicate constitution of an expanding global economy and the seven-year U.S. recovery.
“It brings in the question of just how fragile this elderly bull market really is,” said Ken Goldstein, an economist at The Conference Board, a business-financed research group.
A rebound in Hong Kong stocks Friday failed to persuade investors in other markets that Asia’s economic problems have ended. On Wall Street, the indecision was evident in the volatile swings of the Dow Jones Industrial Average, up 92 points at the onset, then down 152 before trimming its losses to 132.36 at 7,715.41 - the Dow’s lowest finish since Aug. 29.
As a new trading day began Friday, Hong Kong’s main Hang Seng index bounced back from its 10 percent plunge, the steepest retreat since the 1987 crash. It finished up 718.04 points, or almost 7 percent, at 11,144.34, on bargain-hunting after the sell-off.
Relief that the selling spree was interrupted spilled over into Japan’s market, which gained 1.2 percent. European markets also rallied at first, then faded to slight losses in London and Paris, while German markets finished higher.
As the Hong Kong bug lingers, plenty of other germs live on to evolve into market-debilitating viruses another day. Skittish Wall Street investors, for example, also fear the day the Federal Reserve sees enough inflation signs to raise interest rates, dampening the economy and corporate profits.
And throughout Asia, currency concerns persist, like those that prompted the Hong Kong market’s retreat Thursday. Unstable economies in what until recently was viewed as a booming market remain a threat to the United States, which sends more than a quarter of its exports to the Asia-Pacific region.
The sell-off on the New York Stock Exchange on Thursday and Friday especially hit companies that do business in Asia, such as airlines and technology concerns.
“It’s really disheartening,” said Milwaukee public defender Adrienne Drake, who dropped a handful of earrings on hearing of Thursday’s stock shock while shopping. “I was doing pretty good with the stocks I had. I am trying to get as much in while I am still working. Now I guess I will have to work a little longer.”
True market volatility - not the jolting increases of recent years - remains a history subject to millions of Americans.
Generation X, best known for its pierced bodies and jaded outlook, is more optimistic about Wall Street than previous generations. Sixty-five percent of 25- to 33-year-olds have started investing for retirement, according to a survey this month by the nonprofit Employee Benefit Research Institute and the American Savings Education Council.
And why not? Most were in their teens during the last stock market panic, the Black Monday crash of Oct. 19, 1987. Stocks have bolted about 12 percent annually since then.
‘If you’re 30 years old and you’re investing in Company X for retirement or your kids’ college, the fact that the stock market might have gone down 200 points last night is not going to affect your plans for the year 2015 - nor should it,” Goldstein said.