Stocks Recover Sharply, Nasdaq Recovers Over 600 Points From Intra-Day Low
5:03 pm Monday, January 24th, 2022
Stocks clawed back losses on Monday as investors looked ahead to a busy week of corporate earnings results, economic data and a Federal Reserve monetary policy-setting meeting after an already volatile stretch of trading.
Put another way, the S&P 500 has fallen at least 10% from its all-time high, and the Nasdaq is down almost 20% from its all-time high. Today’s concerns are the same from last week: expectations for the Fed to be more aggressive in tightening policy, a worsening Russia-Ukraine situation, and misgivings about higher costs pressuring profit margins.
Growth stocks are pacing the retreat, but the losses are widespread: All 11 S&P 500 sectors are trading lower between 1.8% (consumer staples) and 4.4% (information technology), declining issues outpace advancing issues by a 10:1 margin at the NYSE, and the Invesco S&P 500 Equal Weight ETF (RSP) is down 2.7%.
Investors hoping to see the market bounce from a short-term oversold condition have been disappointed, which in turn has curbed enthusiasm to buy the dip and possibly fueled the downside momentum. The CBOE Volatility Index has spiked 33.6% to 38.49 amid increased hedging interest.
Interestingly, the Treasury market has firmed up amid the weakness in equities, but not to the point where it exhibits a flight to safety. The 10-yr yield is down just three basis points to 1.72%. The U.S. Dollar Index is up 0.4% to 95.99.
Given the intensity of the selling activity, market observers have to suspect that there could soon be a reprieve. Earnings news could provide some relief, starting after today’s close, as well as the Fed’s policy decision on Wednesday if the central bank doesn’t sound as hawkish as feared.
Separately, Kohl’s (KSS) is rallying 30% after receiving takeover interest from PE firms, which have reportedly offered to pay at least $64 per share for the company. Macy’s (M) is up 8% in sympathy.
