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Tuesday, May 24, 2022

The Stock Market has Made Spectacular Comeback from the Edge of Collapse

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After the Dow industrials fell more than 1,100 points at lunchtime, U.S. market indices staged a remarkable recovery to end higher on Monday.

The stock market downturns that began in early 2022 gained traction early on Monday, as the Dow Jones, Nasdaq, and S & P 500 all fell further. However, by the end of the day, some had seesawed all the way back up. By the end of the day, all three had recovered at least 0.3 percent, capping off a spectacular turnaround. It demonstrates that Omicron January does not have to be gloomy.

Fears over the escalating situation between Russia and Ukraine soured the mood on Wall Street, which was already looking ahead to a Federal Reserve meeting later this week in which officials are expected to lay out a more solid plan for raising interest rates a move that is likely to cool the economy.

Market volatility has risen in recent weeks as investors prepare for the Fed’s projected removal of pandemic-era economic stimulus, which has supplied cheap money to fund wagers on more risky assets.

According to FactSet, the blue-chip barometer’s Relative Strength Index (RSI), a momentum indicator that compares the size of recent falls to recent rallies, has dipped to 24.01, while many chart watchers believe readings below 30.00 indicate an oversold state.

Investors were concerned about the Federal Reserve and how fast it would act to control inflation, as well as how such action would affect asset values. Investors are waiting for a Fed meeting this week, in which the US central bank is anticipated to shed more light on its plans for raising short-term interest rates and shrinking its balance sheet.

Then, in the flash of an eye, bargain-hunting investors jumped in, scooping up shares of popular technology companies like Tesla and Nvidia. The Dow Jones Industrial Average had gained 99.13 points, or 0.3 percent, at the conclusion of the day to settle at 34364.50. The Dow had never ever closed in the black after being down at least 1,000 points. The Nasdaq rose 86.21 points, or 0.6 percent, to settle at 13855.13.

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