US stocks reversed spectacularly

 US stocks reversed spectacularly

The indices turned higher after falling 3-5% at the beginning of the session, as investors poured money into technology stocks.

Closing the session on January 24, the DJIA rose 0.3% to 34,364 points, recording the first increase in 7 sessions. The S&P 500 closed up 0.3% at 4,410 points. The Nasdaq Composite rose 0.6 percent to 13,855 points.

The indexes turned green after dropping sharply at the beginning of the session. Nasdaq Composite sometimes lost up to 4.9%. DJIA once dropped 1,115 points, or 3.25%. The S&P 500 fell into a correction zone, down 10% from its January 3 peak.

Movement of the DJIA index yesterday.

Movement of the DJIA index yesterday.

Yesterday was one of Wall Street's most spectacular reversals in years. It was the first time since the 2008 financial crisis that the Nasdaq fell more than 4% in a session but still closed up. As for the DJIA, this is the strongest reversal since March 2020.

Marko Kolanovic, chief equity strategist at JPMorgan, said yesterday's sell-off was excessive. "The recent drop in risk assets seems to have been overblown. A combination of technical factors and pessimism has contributed to this. Although the market is still struggling to assess the possibility of this. interest rates increase, we forecast this season of business results will reassure investors."

Yesterday, investors sold off technology stocks at the beginning of the session, due to concerns that the US Federal Reserve (Fed) would raise interest rates sharply. However, the group eventually bounced back. Both Meta Platforms, Amazon and Microsoft rose as investors poured money to buy bottoms.

The CBOE Volatility Index that tracks "fear in the market" yesterday hit its highest since November 2020. When CBOE Volatility hits extreme levels, the market tends to bounce back, even if only temporarily.

Despite gaining in the first session of the week, the S&P 500 this month is still down 7.5%, heading for its worst month since March 2020.

Investors are now interested in the Fed's policy meeting this week, to forecast when and how much the Fed will raise interest rates. They also pay attention to geopolitical tensions between Russia and Ukraine. US President Joe Biden is expected to speak with European leaders about the possibility of Russia attacking Ukraine.