U.S. stocks ended a volatile month with the biggest two-day rally since 2020 as Nasdaq 100 posted nearly 6.6 per cent surge in last two sessions.
For the US stock market, January 2022 ended up on a positive note but only after the leading indices recorded a loss on a monthly basis. S&P 500, Nasdaq 100 and Dow 30 were all down by approximately 5.86 per cent, 9.52 per cent and 3.97 per cent respectively in January 2022. U.S. stocks ended a volatile month with the biggest two-day rally since 2020, with beaten-down tech shares powering a late rebound with Nasdaq 100 posting a nearly 6.6 per cent surge in the last two sessions.
US stock market was witness to some huge volatility all during the month. On some days, Nasdaq 100 saw moving up by almost 5 per cent while on other days, it wiped off the entire giants. On January 28th (Friday), it surged more than 3 per cent to end the week slightly higher while on January 31st, Nasdaq 100 clocked another jump of 3.29 per cent to end the month on a high note. S&P 500 also saw its biggest rally since June 2020, with the index wiping out its weekly losses on January 28 and again closing with gains of 1.89 per cent on January 31.
The gains in the fag end of the month came on the back of some great earlings posted by mega tech stovks. Apple Inc. posted a record $123.9 billion in quarterly sales and even Microsoft Corp. Was among the biggest gainers in the last week of January after reporting strong quarterly results and outlooks. Apple climbed 4.9% while Microsoft added 4.1%, putting them among the top 10 best performers on the Nasdaq 100 Index.
Fed Chair Jerome Powell is not expected to keep the interest rate hikes gradual starting March 2022, especially if runaway inflation is witnessed in the US economy. The US economy, however, is showing promising data and is likely to remain on a strong footing in the months ahead.
The volatility being witnessed could be because of investors’ struggle for a consensus on how to value stocks amid signals on monetary policy. For long term investors looking to diversify across US stocks, there are two ways to build a strong long term portfolio. One, keep buying and adding mega cap stocks which are showing resilience even in the current volatility and secondly, take exposure through exchange traded funds (ETFs) in the US stock market.
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