Wall Street stocks had their best day since the start of 2023, helping to ease recent fears about the tech rally.
NAS 100 – Daily Chart
The NAS 100 tech stock index bounced from a low level of around 18,000, with the price clearing previous support. The index will look to secure the recent lows as a base for a rally.
The S&P 500 jumped 2.2% in late trading, heading for its best day since the first week of 2023. The Nasdaq 100 was 2.7% higher, with Big Tech stocks leading.
Markets were boosted by the latest jobless claims data, which showed that fewer US workers applied for unemployment benefits last week. The data was better than economists had expected. The same data on unemployment claims last week began a sharp drop in stocks, totalling 9% in the S&P 500. Investors were shocked by the speed of the drop.
However, BNP Paribas analysts said the market’s drop looks more like a “positioning-driven crash” caused by too many investors making the same trades and taking profits.
The jobless claims data may help fears over last week’s weaker NFP jobs report. Investors will turn their attention to next week’s inflation data.
PPI data on Tuesday are expected to drop by 0.1%, and the annual inflation rate a day later is expected to drop similarly.
Last week’s move in the VIX Index of stock-market volatility reached a level not seen since the Covid outbreak more than four years ago.
“With the summer low liquidity, the still heavy trend plays that need unwinding and the VIX sky-high, this sell-off move could go on for a few days,” Florian Ielpo of Lombard Odier Asset Management said.
Still, “the macro picture itself is not as bad as the market seems to think”.
For now, the rally in chip stocks has found a floor, with Arm Holdings up 10% on the day and Nvidia up more than 6%. The strong rebound could boost Asian markets on Friday.
