All three US stock market indices fell into a correction during the session overnight, with some down as much as 5% before rallying to finish the day.
The end result was broad-based gains for every US benchmark, as the negative sentiment turned positive, with markets clearly preferring to wait for the Fed’s decision rather than acting in advance.
The Nasdaq outperformed, gaining 0.6%, with both the Dow Jones and S&P 500 finishing 0.3% higher.
The weakness remains primarily focused on the Federal Reserve’s impending rates decision, due on Thursday Australian time, with trades predicting more bad news on rates.
As was the case in 2020, volatility and algorithmic trading are amplifying volatility, with many strategies forced to sell automatically when volatility increases, seeing the market swing more than usual.
Investors are also dealing with the threat of a Russian incursion in Ukraine and potential action from US allies.
Interestingly, despite the perceived threat of rate hikes, the US 10-year bond yield has fallen from 1.9% to 1.75% in just a few days.
Department retailers shine
The department store retailers had the strongest day, with Kohl’s (NYSE: KSS) gaining more than 30% after an activist investor offered more than US$9 billion to buy the struggling chain.
Shares in Macy’s (NYSE: M) and Nordstrom (NYSE: JWN) also gained on the news, up 18% and 13%, respectively.
US stock market movers
Here’s how other popular US stocks fared on Monday.
- Trade Desk (NASDAQ: TTD) up 9.9%
- Atlassian (NASDAQ: TEAM) up 6.1%
- Home Depot (NYSE: HD) up 4.2%
- Netflix (NASDAQ: NFLX) down 2.6%
- Airbnb (NASDAQ: ABNB) down 5.6%
- Nio (NYSE: NIO) down 9.1%
Back home on the ASX, the S&P/ASX 200 (ASX: XJO) is set to open lower this morning. For a round-up of the latest news, check out my ASX 200 morning report.