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US markets rebound to close higher

2022-01-25 HKT 05:44
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  • Wall Street ended the day higher after a sharp turnaround lifted by bargain-hunting. File photo: Shutterstock
    Wall Street ended the day higher after a sharp turnaround lifted by bargain-hunting. File photo: Shutterstock
US markets closed higher after a comeback late in the session, lifted by a wave of bargain-hunting.

The S&P 500 earlier came close to confirming a correction as investors focused on concerns about an increasingly hawkish Federal Reserve and geopolitical tensions.

This came on the heels last week of the S&P 500 and the Nasdaq suffering their largest weekly percentage plunge since March 2020, when shutdowns to contain the pandemic sent the economy spiraling into its steepest and most abrupt recession on record.

"I would not be surprised if today is the low point for the major averages," said Sam Stovall, chief investment strategist of CFRA Research in New York.

Still, Stovall added that January is often a barometer for the rest of the year.

"As goes January, so goes the year," Stovall added. "A negative January in 2022 along with a negative first five days of the year would not bode well for the entire year’s performance."

The US Federal Reserve is due to convene its two-day monetary policy meeting on Tuesday, and market participants will be parsing its concluding statement and Chairman Jerome Powell's subsequent Q&A session for clues as to the central bank's timeline for hiking key interest rates to combat inflation.

"I think investors are over-assuming a very hawkish stance by the Fed," Stovall said. "Granted, inflation is high and is likely to get higher before it starts to decline. Specifically we see the headline CPI topping at 7.3 percent for both January and February, but then coming down to 3.5 percent by year-end."

In a sign that geopolitical tensions are heating up, Nato announced it was putting forces on standby to prepare for a potential Russian invasion of Ukraine.

The threat of potential conflict in that region helped US Treasury yields dip, pausing their recent upward climb, which has pressured stocks in recent months.

Meanwhile a report from IHS Markit gave evidence that surging infections of the Omicron Covid variant have caused a marked deceleration of business activity in the United States.

The Dow Jones Industrial Average finished up 0.3 percent at 34,364, more than 1,200 points up on its lowest point earlier in the session. The S&P 500 gained 0.3 percent to 4,410, and the Nasdaq Composite Index advanced 0.6 percent to 13,855.

A series of disappointing earnings from big banks and, notably, lockdown darling Netflix have overshadowed many better-than-expected results.

Tesla shares slid, leading declines among the mega-cap tech and tech-adjacent companies.

Kohl's Corp surged after Reuters reported private equity firm Sycamore Partners is preparing to make a bid for the department store chain days after a consortium backed by activist investment firm Starboard Value proposed a buyout. (Reuters)