Volatile Week & Uncertainties Ahead - Doo Prime News
Doo Prime News > Analysis > Expert Opinion > Volatile Week & Uncertainties Ahead

U.S. stocks closed higher on Friday, 21st October 2022 to score the biggest weekly gain since June. 

Friday’s rally ended another volatile week as prices swung from positive to negative and back to positive throughout the week. The resignation of the UK prime minister, Jobless claims, and company earnings caused large swings throughout the week. 

Ultimately, it was comments from Federal Reserve Bank of San Francisco President Mary Daly that set the course for a week ending rally.   

Daly said that policymakers should start planning for a reduction in the size of interest-rate increases, though it’s not yet time to “step down” from large hikes. 

“It should at least be something we’re considering at this point, but the data haven’t been cooperating,” 

A slowdown to more incremental increases of 50 or 25 basis points will be appropriate as the Fed’s benchmark rate gets closer to its terminal level for this hiking cycle, Daly said. 

The comments resulted in a pullback in yields from its new highs and stocks took their cue to force shorts to cover and FOMO to come in again. 

S&P 500 ended up a solid 4.8% for the week, The Dow Jones rising 4.9%, and the Nasdaq Composite jumped 5.2%. 

Here are the closing levels on Friday, 21st October 2022. 

 Last  Change %Change 
Dow Jones 31,082.56. +748.97. +2.47% 
S&P 500 3,752.75 +86.97. +2.37% 
Nasdaq Comp 10,859.72. +244.88. +2.31% 
US 10Y 4.22%   
VIX 29.69 -0.29 -0.97% 

What a week it has been. It looked like both buyers and sellers had it rough, ultimately the buyers took control to end the week on a high note. 

The takeaway from last week’s trading was that anything can happen. When it looked like it was time to buy, it fell and when it looked like it was going lower it rallied. 

The higher close tells us that investors are looking for reasons to buy and Mary Daly gave them what they wished for. 

If you read closely what was said, it did not change very much, the path of the Fed. They are still anticipated to hike 75 basis points in the next 2 meetings and probably 50 in the one after that. 

But that is not what the market read. It focused on the words like “reduction in the size of interest rate increases”, and “a slowdown to more incremental increases”. 

These actions are a given and will happen at some stage. Nobody thinks that the Fed will hike forever. 

The Fed will reduce its hikes and slow down once it reaches a level that the Fed believes is enough to curb inflation. The terminal rate has been predicted to be as high as 5% by some analysts. We are not nearly there yet. 

However, bulls feel like they can see the light at the end of the tunnel and that now is the time to start building back longs. Are they right? Maybe, maybe not. 

Just remember the saying, the market can stay irrational longer than you can stay solvent. 

There is still a long way till the Fed meeting so I would not be surprised if the markets remain volatile over the next few weeks. 

Source: CBOE, Bloomberg

This commentary is written by James Gomes 
James has been in the finance industry for over 30 years and most recently worked for a large U.S. bank for more than 20 years. 

Risk Disclosure   
Trading in financial instruments involves high risks due to the fluctuation in the value and prices of the underlying financial instruments. Due to the adverse and unpredictable market movements, large losses exceeding the investor’s initial investment could incur within a short period of time. The past performance of a financial instrument is not an indication of its future performance.  Investments in certain services should be made on margin or leverage, where relatively small movements in trading prices may have a disproportionately large impact on the client’s investment and the client should therefore be prepared to suffer significant losses when using such trading facilities.   

Please make sure you read and fully understand the trading risks of the respective financial instrument before engaging in any transaction with Doo Prime’s trading platforms. You should seek independent professional advice if you do not understand any of the risks disclosed by us herein or any risk associated with the trade and investment of financial instruments. Please refer to Doo Prime’s Client Agreement and Risk Disclosure Statement to find out more. 

This information is addressed to the general public solely for information purposes and should not be taken as investment advice, recommendation, offer, or solicitation to buy or sell any financial instrument. The information displayed herein has been prepared without any reference or consideration to any particular recipient’s investment objectives or financial situation. Any references to the past performance of a financial instrument, index, or a packaged investment product shall not be taken as a reliable indicator of its future performance. Doo Prime and its holding company, affiliates, subsidiaries, associated companies, partners, and their respective employees, as well as managers, make no representation or warranties to the information displayed and Doo Prime and its holding company, affiliates, subsidiaries, associated companies, partners and their respective employees, as well as managers, shall not be liable for any direct, indirect, special or consequential loss or damages incurred a result of any inaccuracies or incompleteness of the information provided. Doo Prime and its holding company, affiliates, subsidiaries, associated companies, partners, and their respective employees, as well as managers, shall not be liable for any direct, indirect, special, or consequential loss or damages incurred as a result of any direct or indirect trading risks, profit, or loss arising from any individual’s or client’s investment. 

Share to

One Click Away To Global Investments

Trade glod and Sliver on Doo Prime Doo Prime provides mainstream index futures and commodity futures around the world Doo Prime provide over 300 the most popular US and Hong Kong stock cfd products