[New York Stock Market] Dramatic Rebound After 1000-Point Plunge... 3 Major Indexes Close Higher

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] The three major indices of the U.S. New York stock market experienced a rollercoaster ride from the early session on the 24th (local time) and ended with a dramatic rise. The Dow Jones Industrial Average, composed of blue-chip stocks in the New York market, fell more than 1,000 points at one point during the session but eventually rebounded, closing with gains for the first time in seven trading days.

On this day in the New York stock market, the Dow closed at 34,364.50, up 0.29% from the previous session. The S&P 500, centered on large-cap stocks, closed up 0.28% at 4,410.13. The S&P 500 entered a technical correction phase after falling more than 10% from its intraday high but later succeeded in rebounding. The tech-heavy Nasdaq also rose 0.63% to 13,855.13. The small-cap Russell 2000 index recorded a 1.97% gain.

In the early session, concerns about early tightening and the Ukraine crisis clearly led to a downward trend. The Nasdaq slid as much as 4.9% compared to the previous session. The Dow's drop reached a staggering 1,115 points. This was the result of heightened geopolitical risks surrounding Ukraine combined with concerns about early tightening by the U.S. central bank, the Federal Reserve (Fed), which had driven last week's market weakness.

Among individual stocks, big tech companies such as Apple, Microsoft (MS), Amazon, Tesla, and Meta took a direct hit. The Fed, unable to withstand inflationary pressures, is widely expected to initiate early tightening, leading to massive sell-offs centered on tech stocks again that day. Around noon, only six stocks in the S&P 500 traded in positive territory. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's "fear index," surged to the highest level since November 2020, reaching the 38 level during the session.

However, in the afternoon, the market rebounded as expectations for the earnings season grew and the sentiment that recent risk asset reductions were excessive spread. Investors buying tech stocks that had plummeted were also observed. Microsoft (MS) rebounded, closing up 0.11% from the previous session. Amazon.com (1.33%), Alphabet A (0.35%), and Meta (1.83%) also closed in positive territory. Tesla (-1.47%), Nvidia (-0.01%), Apple (-0.49%), and Netflix (-2.60%) also succeeded in reducing their losses. The VIX index (29.90) fell below 30 after the market closed that day.

Investors are now focusing on hints regarding the timing and magnitude of the Fed's interest rate hikes that Fed Chair Jerome Powell will announce at the Federal Open Market Committee (FOMC) meeting scheduled for the 25th-26th. According to the Chicago Mercantile Exchange Group (CME Group) FedWatch, the federal funds (FF) futures market reflects more than a 90% probability that the Fed will raise the benchmark interest rate in March. Ann Miletti of Allspring Global Investments said, "The biggest fear is how the Fed will act and maintain a balanced approach," adding, "There will be turmoil in the coming months."

On this day, investors were also on high alert about the impact of the Ukraine crisis on the global economy. Russia recently amassed more than 100,000 troops near the Ukraine border, and major governments such as the U.S. and the U.K. have strengthened preparedness by ordering the families of embassy staff in Ukraine to evacuate. U.S. President Joe Biden discussed the possibility of a Russian invasion of Ukraine during a video conference with European leaders in the afternoon. The Biden administration is reportedly preparing to deploy thousands of U.S. troops, warships, and military aircraft to Eastern Europe in anticipation of a possible Russian invasion of Ukraine.

This week, major companies such as Apple, MS, and Tesla will consecutively release their earnings reports. These companies account for about one-fifth of those included in the S&P 500 index. According to FactSet, MS's quarterly revenue, to be released on the 25th, is expected to exceed $50 billion (about 59.6 trillion KRW) for the first time ever. Net income is also expected to reach a record high of $17.41 billion. Apple, which will release its earnings on the afternoon of the 27th, is also expected to break all-time records. Quarterly revenue is estimated at $118.74 billion, with net income at $31.16 billion. Tesla's quarterly revenue is forecasted at $16.99 billion, with net income at $2.33 billion.

International oil prices showed a downward trend. On this day at the New York Mercantile Exchange (NYMEX), March delivery West Texas Intermediate (WTI) crude oil closed at $83.31 per barrel, down $1.83 (2.15%) from the previous session. Gold, a representative safe-haven asset, rose slightly, recording $1,843.30 per ounce, up 0.63% from the previous trading day.

This week, announcements are also scheduled for the International Monetary Fund (IMF)'s revised World Economic Outlook report, the U.S. fourth-quarter GDP, and the U.S. personal consumption expenditures (PCE) that the Fed closely monitors. The IMF originally planned to release the revised report on the 19th but postponed it by a week to further review the impact of the recent Omicron spread.