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[The Epoch Times, January 25, 2022](The Epoch Times reporter Zhang Dongguang comprehensive report) In the tense atmosphere of the Federal Reserve’s upcoming January policy meeting on the 25th and 26th, the tension of Russia’s invasion of Ukraine is also imminent. The IHS Purchasing Managers Index fell from 53.3 in the previous month to 52.4. The pan-European 600 index fell 3.6% on Monday (24th) to record its worst performance in 19 months. The Dow was dragged down by 3.25% during the session. S&P The lowest fell 3.99%, and the Nasdaq fell the most to 4.9%.
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Just as the market sentiment was pessimistic across the board, after the S&P 500 index fell by more than 10% from its peak on January 3 and entered the correction area, the buyers who entered the market on dips entered the market aggressively, pushing up the market.US stocksThe three major indexes closed up on Monday, rising by 0.28% to 0.63%.
US stocksThe three major indexes all showed short-term buying news with long lower shadow lines. The Dow fluctuated by 1,270 points in one day, the S&P index fluctuated by more than 4%, and the Nasdaq by more than 5%. The one-day fluctuation is March 2020. For the first time since, or suggesting that a short-term low has been found.
The main reason for the “short-term buying news” that caused the dramatic shock in the US stock market on Monday was that the short-term stock price fell deeply and was severely oversold, which attracted many long-term investment buying.
JPMorgan strategist Marko Kolanovic said in a report on Monday that the recent stock market decline was too exaggerated, with technical indicators approaching oversold territory, and the pessimistic mood in the market suggests it is entering the final stages of a correction.
Kolanovich said that although investors were spooked by the prospect of the Fed raising interest rates, a bright earnings season is coming, which will provide some support for stock prices. The worst case is the “Fed put” (Fed put) heavy The return may mean that the Fed will correct its previous overly hawkish attitude due to the overreaction of the stock market.
Although the three major U.S. stock indexes opened lower and closed higher on Monday, the VIX panic index, which represents market volatility, still rose 3.6% to 29.9 points on Monday, and surged to 38.7 points during the session, hitting a new high since November 2020. It shows that some investors still dare not take Monday’s stock market rally lightly.
The Dow is down 5.4% so far in January 2022, the S&P 500 is down 7.4% and the Nasdaq is down 11.4%, already seen by many investors as a bad omen. In the past, January was regarded as a critical moment for investors to re-invest funds into the stock market, so the “January effect” was also regarded as a barometer of investors’ stock holding mentality. In 2022, the three major U.S. stock indexes will experience a rare plunge in history, indicating that investors generally expect poor stock market returns in 2022.
The dramatic performance of U.S. stocks on Monday was highlighted. When investors were generally pessimistic and collectively sold their holdings, causing panic and killing, anti-market psychology operators instead aggressively entered the market to sweep the stock, pushing up the stock price after the stock price fell deep.
Statements after the Fed’s January meeting should continue to tighten as long as inflation temperatures don’t drop. However, because the short-term stock price decline is too deep, the market’s reaction to the Fed’s statement may not be as fierce as before, and there may be a “soothing rebound”. The real test will be the U.S. price report for January, due to be released on February 10. The market forecasts an annual growth rate of 7.1% in the consumer price index (CPI), slightly higher than the 7% in December last year.
According to the latest forecast by the futures market, the probability of the Fed raising interest rates in March is as high as 86%, and the probability of raising interest rates four times before the end of 2022 is as high as 72%. It is generally expected that the recent huge volatility in the stock market will still be difficult to change the Fed’s stated interest rate hike stance. Unless the stock market enters a full correction or even a bear market, and triggers the chilling effect of a rapid consumption contraction, raising interest rates to fight inflation will still be the Fed’s current wisdom. decision.
Responsible editor: Ye Ziwei#
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