Fasten your seat belts well. Volatility is still on Wall Street – stock market

Stocks on the other side of the Atlantic had another day of strong sentiment, on a real roller coaster, so much so that CNN Business said “investors are tightening their belts better, because there is no sign of an end to the volatility on Wall Street”.

The Dow Jones Industrial Average closed 0.19% lower at 34,297.73 points. On January 5th, he remembered that he touched a level he hadn’t reached before at 36,952.65 points.

The Dow was losing steam, in a selling move that was observed throughout most of the session, but in the last hour of trading, it managed to turn around, just like yesterday. However, at the final stage, he lost his breath again and returned to the passive terrain.

Johnson & Johnson and American Express, two components of the Dow, did well after making good “forecasts” in their account presentations, which helped revitalize the indicator – but not enough to keep it afloat.

The Standard & Poor’s 500 closed 1.22% lower to 4,356.45 points. The all-time high in daily trading was reached on January 4th at 4,818.62 points.

On the other hand, the Nasdaq Technology Composite Index, which is in the correction territory, declined by 2.28% to settle at 13,539.30 points. The all-time high on the Nasdaq at 16,212.23 points, set on November 22.

The Fed’s two-day meeting contributed to the strong volatility, which kept investors on hold. Tomorrow, 7pm in Lisbon, indications will be given on the central bank’s monetary policy, but everything continues to indicate that the Fed started raising key rates as early as March.

Investors are also interested in offering technology accounts. After Netflix on Thursday and IBM this week, it will be Microsoft’s turn today to release its results after stock markets close. Tomorrow follows Tesla and on Thursday Apple.

May a new path come

Gains and Capital, in an analytical note accessible to Negócios, indicated yesterday that the sell-off recorded last week caused the S&P 500 to lose the equivalent of six months of gains.

“The big question for investors this week is, where do we go from here? First and foremost, the market is severely ‘oversold’. The S&P 500 reveals the lowest RSI reading since the March 2020 crash. The market is as oversold as it was during the first wave of the global pandemic,” asserted Graham Summers—Phoenix Capital Management’s chief strategist—in the above “research” by Gains Pains Capital.

“This suggests a recovery is on the way. It is highly unlikely that stocks will continue lower from here. Instead, we may see a rally after the Fed meeting on Wednesday. If stocks maintain these gains, it could be a drop. The latter turned out to be an insignificant step to remove excess “foam” from the market.

Almost debuted for the S&P 500

The S&P 500, this Tuesday, was reversing the negative trend and entering the gains territory – and if it had maintained the positive trend until close, that would be an achievement.

According to Bloomberg data, dating back to the early 1980s, the S&P 500 never fell at least 2% from the previous session in two consecutive sessions before ending up positive. The day was about to happen.

Another interesting statistic is that the index fell only eight times – for two consecutive days – by 1% in daily trading and then closed higher: three times in 2002, three times in 2008-2009 (during the global financial crisis), one in 2015 and one in 2020.

“buy dip”

One reason for the recovery during the session, and even at the close (like yesterday), is the fact that many investors are taking advantage of dips to buy – the so-called “buy the dip”.

Bloomberg notes that “declining buyers have re-emerged to take advantage of lower-priced stocks after a sell-off fueled by concerns about the Fed’s tougher stance and the Russian military build-up on the Ukrainian border.”