The Wall Street bull statue (GETTY IMAGES NORTH AMERICA/SPENCER PLATT)
Wall Street saved the day at the close on Monday, and managed to end up following a dark session on the eve of the meeting of the American Central Bank (Fed).
According to the final results, the Dow Jones index rose 0.29% to 34,364.50 points following losing up to 3% at noon, while the Nasdaq gained 0.63% to 13,855. 13 points while the high-tech index had melted by 5% a day.
The S&P 500, which entered a correction during the session with a fall of more than 11% over the month, ended in a snatch in positive territory at 4,410.13 points (+0.28%).
One hour from the close, the indices turned around and started to rise once more, reflecting an accelerated return of investors in search of bargains following six sessions of decline for the Dow Jones and a Nasdaq at its lowest in eight month.
In the middle of the session, Wall Street faced its worst January in history, noted analysts at Schwab.
“There was a fear that the Fed might raise rates by a 50 basis point kick at some point,” Mazen Issa of TD Securities said in explaining the investor selloff.
The US Central Bank meets for two days on Tuesday and is expected to say more on Wednesday regarding the volume and frequency of rate hikes it plans to tackle persistent inflation.
In their last average rate forecasts, the members of the Monetary Committee had suggested that we were heading for three rate hikes of 25 basis points in 2022.
But since then, the markets have been convinced that this rate of monetary tightening will be accelerated, which is shaking Wall Street.
The in extremis rebound of the indices “shows that the market was oversold”, commented Karl Haeling of LBBW.
He points out that the VIX index, dubbed the “fear index” because it reflects volatility, had suddenly climbed to a one-year high, “also indicating an oversold market”.
Many flagship stocks fell in session to their lowest level of the year, such as Twitter which lost more than 7% before finishing positive by 0.69% at $35.06.
“That’s basically why the market rebounded,” said the analyst. “We had exhausted sales but I’m not quite sure we’ve bottomed out,” he said.
“If the Fed sends a tougher message on rates, then we might go back down. On the other hand, if it is less strict than some think, the market might show a big rebound”, continued Karl Haeling. promising “a strong reaction one way or the other following the Fed”.
Adding to the gloomy mood, investors kept an eye on escalating geopolitical tensions with the possibility of a Russian invasion of Ukraine.
“The Fed is the dominant issue but there are also concerns that Russia is entering Ukraine, this contributes” to volatility, added the LBBW expert.
Yields on 10-year US bonds rose a little to 1.76% from 1.72% during the day and 1.75% on Friday.
The US oil services group Halliburton gained 3.81% to 28.58 dollars following announcing quarterly and annual revenues above expectations, driven by rising oil prices.
Among the values of the day, the specialist in high-end exercise bikes Peloton, which had suffered a descent into hell last week, kept its head above water (+9.79% to 29.71 dollars) .
The company, which has had great success with the pandemic but is facing a drop in demand, has suspended production, according to information published Thursday by the CNBC channel. The stock has fallen almost 25% since January.
On Monday, activist investor Blackwells Capital sent a letter to Peloton’s board demanding the immediate departure of the group’s boss and the sale of the company.
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