Nasdaq dives 3%, S&P 500 on course to confirm a correction

A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, USA, January 21, 2022. REUTERS / Brendan McDermid

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January 24 (Reuters) – US stock indices fell on Monday, with the S&P 500 on course to confirm a correction as the prospect of a Russian attack on Ukraine came as a double shock to investors already worried about aggressive Federal Reserve policy tightening.

A correction is confirmed when an index closes 10% or more below the record’s final level. The S&P 500 index (.SPX) is now down 10.9% from its record high on 3 January.

All 11 major S&P sectors fell in early trading, with nine of them falling more than 2% each.

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The economically sensitive small-cap Russell 2000 Index (.RUT) fell 2.8%. The index fell as much as 20.3% from its peak on November 8, setting it on course to confirm a bear market.

The US State Department announced on Sunday that it was ordering diplomats’ family members to leave Ukraine, as US President Joe Biden considered options to increase US military assets in Eastern Europe to counter the build-up of Russian troops.

The order was one of the clearest signs so far that US officials are preparing for an aggressive Russian move in the region. read more

A widely monitored measure of investor anxiety in US markets – the CBOE Volatility Index (.VIX) – was last traded at its highest level since January 2021.

“Ukraine is clearly a concern that weighs on the markets today,” said Darren Schuringa, CEO of ASYMmetric ETFs in New York. “This will continue to weigh on the markets for the foreseeable future until there is some form of solution and more clarity on what the outcome looks like.”

The Fed’s political meeting ends on Wednesday, and the market will closely monitor how worried the Fed is about rising inflation and how aggressive the US Federal Reserve will be in trying to limit it. read more

Fed funds futures traders fully price an increase of 25 basis points in March, in addition to a further three interest rate increases at year-end.

Equities have had a tough start in 2022, with the Nasdaq index (.IXIC) now down 16% from the close-up in November, as the prospect of a faster tightening of policies spurred a rise in government interest rates, which gave a strong blow to Wall Street’s growth name.

At 10:20 ET the Dow Jones Industrial Average (.DJI) was down 744.95 points, or 2.17%, to 33,520.42, the S&P 500 (.SPX) was down 120.17 points, or 2.73% , to 4,277q and Nas. Composite (.IXIC) was down 439.17 points, or 3.19%, to 13,329.75.

Tesla Inc (TSLA.O) fell 7.7% to lead the decline among mega-cap technology stocks.

“For many technology companies, multiples and valuations are absolutely high in many cases, so if you do not provide earnings to justify the valuation, there is room for further and further corrections,” said Schuringa.

Kohl’s Corp (KSS.N) up 31.6% after Reuters reported that private equity firm Sycamore Partners is preparing to bid for the US department store days after a consortium backed by activist investment firm Starboard Value proposed a acquisition. read more

Falling issues were more than progress for a 12.49-to-1 ratio on the NYSE and for a 7.33-to-1 ratio on the Nasdaq.

The S&P index recorded a new 52-week high and 27 new sediments, while the Nasdaq recorded two new highs and 1,146 new sediments.

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Reporting by Devik Jain and Bansari Mayur Kamdar in Bengaluru; Edited by Maju Samuel

Our standards: Thomson Reuters Trust Principles.

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