Tech stocks drive Wall Street to end the week on a high:
Wall Street indices saw a notable rebound thanks to gains in major tech stocks,
following a wave of sell-offs triggered by disappointing forecasts from leading companies across various sectors.
Contents
S&P 500 rebounds
Economic fears weigh on U.S. stocks
Continued volatility on Wall Street
Systematic funds shift positions
Trade risks under Trump’s shadow
S&P 500 rebounds amid sharp volatility
Five minutes before the market closed, the S&P 500 recovered after falling by more than 1% earlier.
The market experienced sharp volatility as many options expired,
contributing to a surge in trading activity.
Tesla was among the biggest drivers of the rebound in large-cap stocks,
while Boeing shares surged after winning a contract to develop a next-generation U.S. fighter jet.
Meanwhile, disappointing forecasts from Nikkei, FedEx, Micron Technology,
and Lennar Corp weighed on the market.
Wall Street also faced added turbulence from the expiration of derivatives,
equities, indexes, and ETFs worth an estimated $4.5 trillion.
Economic fears weigh on U.S. stocks
The U.S. stock market lost trillions of dollars in market value
last month amid concerns over economic slowdown, rising tariffs,
and escalating geopolitical tensions.
Persistent anxiety over elevated tech stock valuations added to traders’ caution.
Despite the S&P 500 entering a 10% correction last week,
the market failed to sustain a rebound,
putting pressure on the traditionally respected “buy-the-dip” strategy.
Continued volatility on Wall Street
According to Michael Wilson of Morgan Stanley,
volatility is expected to persist into at least the second half of 2025,
with stocks remaining below their record highs from last month.
Wilson told Bloomberg TV this week: “We expect this recovery to continue,
but we don’t foresee record highs being reached in the first half of the year.”
By the close, the S&P 500 and the Dow Jones Industrial Average showed little change,
while the Nasdaq 100 rose by 0.4%.
The 10-year U.S. Treasury note yield rose by one basis point
to 4.25%, and the dollar climbed 0.3%.
Systematic funds shift positions
According to data from Goldman Sachs ‘ trading desk,
trend-following funds turned to short U.S. equities for the first time in over a year,
with commodity trading advisors (CTAs)
reducing their exposure to the S&P 500 to its lowest level since 2023.
Conversely, according to JPMorgan data,
retail investors poured over $12 billion into U.S. equities in the week ending March 19.
Analysts are closely watching retail investors,
as they are often the last to reduce their stock holdings
an indicator that markets may not have bottomed yet despite the latest buying spree.
Trade risks under Trump’s shadow
Michael Hartnett from Bank of America said investors
largely ignore the risks of a full-blown trade war,
even as substantial capital flows into global equity markets.
According to market data, despite growing concerns over tariffs,
Since Donald Trump’s election, investors have seen limited chances of a recession,
especially given the positive market performance in key exporting nations like Germany and China.
Analysts from 22V Research, led by Dennis DeBusschere, said:
“The VIX and credit spreads have returned to levels consistent
with a non-recessionary environment but one marked by heightened uncertainty,
supporting technical strength within the stock market.”
They added: “This aligns with our view that the U.S. economy is not on the verge of a fast-approaching recession.”
While the market is awaiting retaliatory tariffs, expected
on April 2, 22V’s Kim Wallace believes that current trade policy risks are less concerning than in December,
with final tariff figures likely to come lower than feared.
22V added: “Uncertainty will remain elevated as negotiations continue,
which is negative from a stability perspective but potentially positive, given
that tensions appear to be easing compared to recent months.”
Tech stocks drive Wall Street to end the week on a high
