The S&P 500 staged its biggest intraday reversal since March 2020, while US core inflation continues to accelerate. Indeed, all the hotter-than-expected inflation prints this year have caused the US market to sell off. Except this one.
In fact, US markets reversed a -2.4% fall in early trade to close 2.6% higher, the largest intraday swing since 26 March 2020 three days after the pandemic bottom.
The Dow closed at 30,038 up 2.83%, the S &P 500 closed at 3,669 up 2.6% and the NASDAQ rose 2.23% to 10,649. The Volatility Index landed at 31.94.
Talk about volatile. But of course, volatility is a trader’s friend, and Bloomberg rightly highlights that technical levels factored into the bounce. At one point, the benchmark S&P 500 had given back 50% of its post-pandemic rally, triggering programmed buying. A wave of put options bought to protect against such a rout moved into the money, and as profits were booked, that prompted dealers to buy stocks to remain market neutral.
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