Nasdaq 100 and S&P 500 Surge as Tech Stocks Lead Market Rebound Today

Stock Market Rebounds Amid Broad-Based Gains

Stocks surged on Tuesday, recovering some of the losses from the previous trading session.

At 16:00 GMT, the Dow Jones Industrial Average is trading 39165.49, up 462.22 or +1.19%. The S&P 500 Index is at 5274.25, up 87.92 or +1.70% and the Nasdaq-100 Index is trading 16479.05, up 278.97 or +1.72%.

All Sectors in the Green

All eleven sectors of the S&P 500 were positive, with the technology sector up nearly 2%. Key tech giants saw significant rebounds; Nvidia soared 4.7%, and Meta Platforms advanced more than 5%, recovering from Monday’s downturn. However, Apple continued its decline, slipping 0.4%. Real estate led the gains among the sectors with a 2% increase, followed by information technology which rose 1.4%.

Japanese Stocks Boost Market Sentiment

Japanese equities also contributed to the positive sentiment. The Nikkei 225 experienced its best day since October 2008, skyrocketing 10.2%, following a severe 12.4% drop the day before, marking its worst day since 1987. This dramatic recovery helped alleviate some concerns over global economic conditions.

Monday’s Volatility

The market volatility seen on Monday was intense, driven by economic uncertainty. The Dow dropped 1,033.99 points (2.6%), and the S&P 500 fell by 3%, marking their worst sessions since September 2022. The Nasdaq Composite plunged by 3.4%. A significant factor in this volatility was the unwinding of the yen carry trade, triggered by the Bank of Japan’s recent interest rate hike, which increased the yen’s value and affected traders who borrow in yen to invest in other assets.

VIX Spike Reflects High Market Anxiety

The Cboe Volatility Index (VIX) saw a dramatic spike on Monday, the highest since March 2020. It peaked at over 65, up from 23 on Friday, highlighting heightened market anxiety. Jim Reid from Deutsche Bank pointed out that this intra-day move was unprecedented in terms of percentage increase, even surpassing those seen during the Great Financial Crisis. The VIX dropped six points to 32.5 on Tuesday morning.

Market Forecast

While Tuesday’s rally indicates a potential stabilization, continued volatility is expected as the yen carry trade unwinds. Despite this, underlying economic fundamentals remain robust, with a relatively healthy labor market and strong economic indicators. Investors should brace for possible pressure in the coming weeks but maintain confidence in the market’s long-term health.

Technical Analysis

E-mini Nasdaq-100 Index futures are trading higher on Tuesday after testing a major 50% to 61.8% zone at 17858.50 and 17198.25, respectively.

The index is currently trading on the bullish side of the 200-day moving average at 18163.42, which could act like a pivot today.

A sustained move over 18163.42 will indicate the presence of buyers. This could lead to an eventual test of a 50% level at 18534.00. This could provide some headwinds.

If the 200-day moving average fails as support then look for a pullback into the 50% level at 17858.50.