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Longest short week in Wall Street history sends S&P500 index worst performer in over a year

Longest short week in Wall Street history sends S&P500 index worst performer in over a year

The Dow Jones Industrial Average closed 1.30% lower at 3,4265.37 points. On January 5th, he remembered that he touched a level he hadn’t reached before at 36,952.65 points.

The Standard & Poor’s 500 Index fell 1.89% to 4,397.94 points. The all-time high in daily trading was reached on January 4th at 4,818.62 points.

For its part, the Nasdaq Technology Index decreased by 2.72% to settle at 13.768.92 points. Since Wednesday, this indicator has been in correction territory, losing 10% compared to the previous closing record it reached on November 19.

The all-time high on the Nasdaq at 16,212.23 points, set on November 22. Which means that in less than two months he has already lost 2443.31 points.

The pressure on today’s trading has been mainly technology companies – which have taken on heavy debt in the past two years, due to low interest rates, and which now fear the impact of the Fed’s hike in key interest rates that may start as early as March.

In addition, Netflix sank 21.79% due to investor disappointment after announcing its results for the fourth quarter and for the whole of 2021 yesterday, after Wall Street closed.

Netflix, which provides a streaming service for movies and TV series, was among the biggest dropouts from the S&P 500 after its accounts plunged the market. Although new subscribers were higher than expected in 2021, growth was the slowest since 2015.

The shortest week but too long

Volatility has been steady in stock markets all this month and shows no signs of slowing, Bloomberg confirms.

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The S&P 500 had its worst week since October 2020. This week was shorter as US markets were closed on Monday to celebrate Martin Luther King Jr.

“This was the longest short week in history, wasn’t it?” Jay Pelosky, founder and chairman of TPW Investment Management, told Bloomberg TV. “It’s only been a week out of four days and it looks like they’ve had two weeks to live in it,” he added.

The patch has more legs to walk

According to Marco Silva, an advisor at ActivTrades, “It is not just the fact that the Fed’s asset purchases will end soon and the possibility of a central bank balance sheet reduction starting in the middle of this year that affects the internal dynamics of supply and demand.”

This dynamic has been unbalanced for a long time “because of the infusion of money into the system, specifically into the bond sector, which ended up shifting mountains of capital to other sectors with greater risk, whether traditional, like stocks, or exotic — like cryptocurrencies.” , as he confirms in his daily analysis.

“So naturally there will be a price reconfiguration, with a correction that still technically has room to run.” That’s because, at the moment, this correction has been more focused on the Nasdaq, “just that, as seen yesterday in Peloton’s announcement of a production freeze of some products due to lack of demand, an adjustment in the economy may be in the process of germinating as a result of consumers retreating due to the inconsistent increase at regular prices.

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