It’s ugly out there: What’s happening in the market rout

Check here for the latest updates on markets and stocks Publishing date: Jan 24, 2022  •  1 hour ago  •  5 minute read  •  43 Comments The Nasdaq Composite Index is having the worst start of a year in more than a decade. Photo by Michael Nagle/Bloomberg Last week both the S&P 500 and Nasdaq logged…
It’s ugly out there: What’s happening in the market rout

Check here for the latest updates on markets and stocks

Publishing date:

Jan 24, 2022  •  1 hour ago  •  5 minute read  •  43 Comments

The Nasdaq Composite Index is having the worst start of a year in more than a decade. Photo by Michael Nagle/Bloomberg

Last week both the S&P 500 and Nasdaq logged their biggest weekly percentage drops since the onset of the pandemic in March 2020. Today it looked like the carnage was continuing until dip-buyers swooped in to save the day. Check here for the latest updates on markets and stocks.

4:55 p.m.

Canada’s main stock index on Monday fell to a five-week low as fears of a Russian attack on Ukraine and aggressive policy tightening by the Federal Reserve weighed on investor sentiment, but the index clawed back much of its earlier decline.

The Toronto Stock Exchange’s S&P/TSX composite index ended down 50.09 points, or 0.2 per cent, at 20,571.30, its lowest closing level since Dec. 20.

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4:00 p.m.

Wall Street bounced back from a steep sell-off late in the session to close higher on Monday, with bargain hunters pushing the indexes into positive territory.

The S&P 500 earlier came close to confirming a correction as investors focused on concerns about an increasingly hawkish Federal Reserve and geopolitical tensions.

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This came on the heels last week of the S&P 500 and the Nasdaq suffering their largest weekly percentage plunge since March 2020, when shutdowns to contain the pandemic sent the economy spiralling into its steepest and most abrupt recession on record.

According to preliminary data, the S&P 500 gained 13.77 points, or 0.31 per cent, to end at 4,411.71 points, while the Nasdaq Composite gained 97.25 points, or 0.71 per cent, to 13,866.17. The Dow Jones Industrial Average rose 108.45 points, or 0.32 per cent, to 34,373.82.

— Reuters

3:58 p.m.

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3:50 p.m.

The Nasdaq has just turned positive as markets continued to pare losses from earlier lows.

The Nasdaq composite was up 42.86 points, or 0.31 per cent, to 13,811,78 in the final 10 minutes of trading.

3:15 p.m.

The Canadian dollar weakened to its lowest level in more than two weeks against the U.S. dollar as markets sank.

The loonie was trading 0.5 per cent lower at $1.2650 to the greenback, or 79.05 U.S. cents, after touching its weakest level since Jan. 7 at $1.2701.

“While risk-off price action has been abundant today due to geopolitical factors, it took the nosedive in U.S. equity markets to trigger a fresh wave of risk aversion in markets,” said Simon Harvey, head of FX analysis for Monex Europe and Monex Canada.

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— Reuters

2:30 p.m.

The S&P 500 has cut its losses by half, but still remains about 10 per cent below its record set just three weeks ago. If it closes there it will be in correction. It’s now down about 95 points at 4,302.

2:07 p.m.

This definitely has an early 2000 feel to it — inflation, tech bubble, tight labor market, flat yield curve, value trumping growth in a down market. Biggest difference? The Fed was completing its tightening campaign back then; this one hasn’t even started yet!

— David Rosenberg (@EconguyRosie) January 24, 2022

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2:05 p.m.

This is worrying. There are few signs in the options market that traders are expecting the sell-off to abate soon, reports Reuters.

“I am not seeing much along the line of ‘quick end to the sell-off’,” said Chris Murphy, co-head of derivatives strategy at Susquehanna International Group. “It still looks pretty fearful.”

Trading in put options today, typically used to place defensive or bearish bets on stock and index prices, outnumbered trading in bullish call options by 1.1-to-1. That’s the most bearish that ratio has been since March 2020, according to Trade Alert data.

“This is definitely more severe than anything we have seen in pretty close to two years,” Randy Frederick, vice president of trading and derivatives for the Schwab Center for Financial Research, told Reuters.

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And hardly anyone is buying the dip. Murphy said aside from some stray bets on the upside traders appear to staying away from dip-buying today.

One reason is that they got burned on the strategy last week when stocks tended to rise early only to give up the gains and more later in the day.

“If I were a bargain hunter, I might be a little gun shy based on that,” Frederick said.

— Reuters

1:15 p.m.

Attention retail investors, be careful if you’re out their hitting that buy button. Have a strategy and stick to it and don’t onboard excessive risk especially when it could be catching a falling knife! pic.twitter.com/KZbJmKzITn

— Martin Pelletier (@MPelletierCIO) January 24, 2022

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12:51 p.m.

Crypto caught up in ‘selling fear across the board’

The crypto crash is underway amid a broader market sell-off, seeing the market’s valuation virtually halved from the sector’s peak.

In November, the total crypto market cap was flying high at nearly US$3 trillion, according to figures from Coin Market Cap. It has since tumbled precipitously, landing closer to US$1.6 trillion on Sunday evening.

Bitcoin saw a value freefall from US$67,000 in early November to roughly US$33,000 by the Monday morning trading day, figures from CoinDesk reveal. Bitcoin managed to turn positive through the trading day, climbing back up over US$35,000. Likewise, Ethereum fell from US$4,818 to US$2,379 in that same time frame.

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“I think it’s just a selling fear across the board, pretty much in every asset class,” Barry Schwartz, chief investment officer at Baskin Wealth Management, told the Financial Post. “The sellers on the weekend just wanted to get ahead of it.”

Schwartz added that investors in the crypto space generally need a stronger stomach, especially during a massive sell-off where assets like bitcoin can be extra volatile.

“… It all comes down to liquidity, and liquidity is being sucked out of the market right now,” Schwartz said. “There’s just not going to be anything left for the crypto market either, so that will be in trouble.”

— Stephanie Hughes

12:34 p.m.

Ouch!

A midday check on stocks isn’t encouraging. The Dow Jones Industrial Average is down 1,075 points, Nasdaq down 649.10 and S&P off 170.32.

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The TSX has plunged 703.80.

11:44 a.m.

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11:40 a.m.

If stocks have it bad today, and so far they do, cryptocurrencies have it worse.

Bitcoin has tumbled 6.6 per cent to a six-month low and other digital currencies are seeing even bigger losses, reports Bloomberg.

Ether fell 7.6 per cent and touched US$2,201, also the lowest since July. Solana’s SOL and Cardano’s ADA plunged 19 per cent and 13 per cent, respectively, according to data compiled by CoinGecko.

Bitcoin and other cryptocurrencies have come under widespread selling pressure in recent days, with traders pointing to hawkish signals from the Federal Reserve and a selloff in technology shares as reasons for traders to withdraw from risky assets. Photo by REUTERS/Dado Ruvic/Illustration/File Photo

Hawkish signals from the Fed and a tech selloff have investors backing away from riskier assets like cryptocurrencies, which some say is not a bad thing.

Since its all-time high in November, Bitcoin has tumbled more than 50 per cent.

“We don’t think it is a bad thing if market volatility takes some of the air out of the more speculative corners of the market,” said strategists led by Mark Haefele, chief investment officer at UBS Global Wealth Management.

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— Bloomberg

11:24 a.m.

Canada’s main stock index is not having a great day either. The TSX was down 417.19 points at 10:44 this morning, the lowest in three months. It shed 3.4 per cent last week.

What has investors so worried this morning? They are bracing for meetings by the Bank of Canada and the U.S. Federal on Wednesday, both of which are likely to outline policy tightening or potentially hike. Add to that tensions between the West and Russia with troops building up on the Ukraine border and it’s a recipe for a rout.

The TSX was down 2.68 per cent this morning.

10:49 a.m.

The S&P 500 headed toward correction territory today. The benchmark index fell as much as 2.3 per cent Monday and will join the Nasdaq in official correction if it closes 10 per cent below the Jan. 3 high. At 10:48 a.m. ET, it was down 76.10 points at 4,321.84.

The S&P 500 Index is set to enter a correction phase after the benchmark fell for a fifth day. Photo by Yahoo Finance

Additional reporting by Reuters and Bloomberg

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