The market experienced its most volatile week of 2024 this week. On Monday, the S&P 500 had its worst day since 2022, lost 3%, and the Dow fell 1,000 points.
Letdown by U.S. Hedge funds sold off and unwound a popular currency trade primarily due to payroll data from the previous week and worries that the Federal Reserve was too late with rate cuts.
Friday saw minor upsides as the market continued to build on its amazing recovery from Monday’s catastrophic collapse. The weekly losses on the broad market index were almost entirely recovered by the end of the week.
This volatile trading activity is not a sign of a collapsing economy; rather, it is typical of the late summer, when information flow is low and earnings season is winding down. The S&P 500 had dropped almost 10% from its most recent all-time high via Monday’s lows. The decline in the Nasdaq Composite went beyond 10 percent, entering the full correction territory.
Walltreet uses the Cboe Volatility Index to gauge fear, and it recently hit levels not seen since the start of the COVID-19 pandemic and the Great Financial Crisis.
However, with the belief that there would not be another crisis or recession, investors jumped in to buy the dip. Hedge funds unwinding a long-term bet on a low Japanese yen was largely responsible for the week’s early losses, rather than underlying economic threats.
The S&P 500 finished at 5,344.16 index points,0.47%. The Nasdaq Composite ended the day at 16,745.3, up 0.51%. To close at 39,497.54, the Dow Jones Industrial Average increased by 51 points, or 0.13 percent.
The broad market index was down just 0.04% so far this week. It managed to turn positive for the week during Friday’s session, but then some of its gains were lost. In the meantime, the tech-heavy Nasdaq and the blue-chip Dow both saw weekly declines of 0.6 and 1.8 percent, respectively.
Nevertheless, the major averages recovered, and investors’ worries about the U.S. economy were put to rest by Thursday’s positive weekly jobless claims figure. S. economy. The 30-stock Dow increased by about 683 points on Thursday, while the SandP 500 saw its best day since November 2022 with a 2 percent gain. The tech-heavy Nasdaq Composite saw gains of almost 2.9%.
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