After two weeks of gains, is the Wall Street correction over?

On Friday the united states stock indices They finished their second consecutive week of gains. The Nasdaq index, which brings together some of the most important firms in the technology sector, accumulated an advance of 2.38% during the week, strengthening its rebound.

The previous week the index achieved a marginal positive movement of 0.01%, after pressures suffered during January that took it more than 10% below its best historical record. Against that milestone (of 16,212.20 units in November), it is still 15% below.

Not only is it important to mention that the Nasdaq remains in correction territory, most of its components, including some of the largest companies in the market, are more than 10% below their ceilings. Discount seekers study how to proceed.

Short-term volatility

The technology It has acted as a thermometer in the United States market in this first part of 2022, because investors analyze their situation and reconsider prices in a new context that promises less support for the economy and, at the same time, lower yields.

Much of the Nasdaq’s weekly gain was recorded in trading on Friday, fueled by a very positive report from However, a day before the Nasdaq had fallen almost 4%, dragged down by negative quarterly results from Meta Platforms (Facebook).

The Vix index, which measures volatility in the market, has fallen 40.37% from January’s high of 38.94 units to 23.22 units on Friday. But results that fell short of expectations were enough on Thursday to dampen enthusiasm.

For Edgar Arenas, coordinator of economics and investment funds at Rankia, this volatility in the stock markets has been overreactions:

“This is not going to be mitigated, but it is circumstantial and not structural. After a rate hike comes a correction, but that’s after and not during,” she said.

The recent rallies They suggest that the correction is losing strength and could start a new upward stretch: “The stock markets had been looking for a reason to correct. I don’t see a catastrophic scenario, an unlikely catalyst would be Russia and Ukraine,” Arenas said.

And the higher interest rates?

In a context without high inflation, the latest US non-farm payroll numbers would have been a decidedly forward sign, but inflation pressures remain and strong employment gives the Federal Reserve more responsiveness.

In January, 467,000 jobs were created compared to an estimated 150,000. The reality exceeded forecasts three times. The Labor Department also revised data for December, from 199,000 to 510,000. Employment strength outperformed the Omicron variant of Covid-19.

“The fact that rates will rise is underpinned, although the market discounted it,” said Arenas; however, he considers that the scenario is positive and inflation will tend to decrease, which will give the market room to grow hand in hand with the US economy.

“US stocks are dependent this year on economic growth. The United States is not going to stop growing, although it will do so at a slower rate than last year.”

[email protected]

Leave a Comment