After declining last week and breaking a four-week gaining streak, the S&P 500 (SPX-INDEX) started this week on a weaker note. Following a decline to two-month low price levels on Monday, the S&P 500 opened lower on Tuesday but rebounded as the day progressed. Nine out of the S&P 500’s 11 major sectors advanced on Tuesday.
Strength in the IT and materials sectors pushed the market higher, while weakness in the utilities and real estate sectors limited the market gains.
The market sentiment was weak at the beginning of this week amid concerns about signs of inflation and rising bond yields. Inflation concerns skyrocketed after the release of stronger-than-expected US employment data on Friday. Speculations about the Fed raising the interest rates aggressively decreased the risk appetite and weighed on the market. The rise in Treasury yields also deepened the sell-off in the equity market. On Tuesday, most of the major sectors rebounded from Monday’s lows. With a gain of 1.7%, SPY recorded the biggest one-day gain since November 7, 2016.
The CBOE Volatility Index (or VIX) measures uncertainty in the market. It fell 19.7% to 29.98 on February 6. The index is measured on a scale of one to 100 with 20 as the historical average. The VIX is also called the “fear index.” Usually, it has an inverse relationship with stocks and rises when the S&P 500 falls.
NASDAQ and Dow
The NASDAQ Composite Index (COMP-INDEX) and the Dow Jones Industrial Average (DJIA-INDEX) opened lower on Tuesday but moved higher as the day progressed. Amid a rally in the IT sector, the tech-heavy NASDAQ Composite Index gained 2.1% to 7,115.88. Following the weak daily start, the Dow Jones Industrial Average declined by 567 points. Amid improved sentiment at the end of Tuesday, the Dow Jones recovered the losses and closed 567 points higher (+2.3%) at 24,912.77.
In the next part, we’ll discuss how the S&P 500’s top gainers performed on February 6.