Market Update: U.S. Stocks Regain Ground but Bearish Forces Persist

U.S. stocks rebounded on Thursday, just 24 hours after the major indexes erased their yearly gains in an epic collapse.

Stocks Rebound

All of Wall Street’s major indexes rebounded sharply on Thursday amid broad gains in virtually every sector. The large-cap S&P 500 Index jumped 1.9% to 2,705.55. Ten of 11 primary sectors finished in positive territory.

The S&P 500’s information technology index surged 3.3%. Consumer discretionary and communications services also rose more than 2.8%.

Surging tech shares helped the Nasdaq Composite Index secure a gain of 3% to close at 7,318.34.

Most of the Dow 30 industrial companies finished in positive territory, led by Microsoft Corp (MSFT) and Intel Corp (INTC). The Dow Jones Industrial Average gained 400.93 points, or 1.6%, to 24,984.35.

Bearish Risks Persist

Stocks plunged into correction territory on Wednesday, with the Dow and S&P 500 erasing their yearly gains. The Nasdaq posted its biggest single-day loss since August 2011 as concerns over global growth and corporate earnings triggered a mass exodus from riskier assets.

Despite the rebound on Thursday, more than two-thirds of S&P 500 companies are in correction. In market speak, a correction is a loss of 10% or more from the most recent peak. For a full-blown bear market to occur, losses need to exceed 20% or more from their recent highs.

The Chicago Board Options Exchange Volatility Index also paints a grim picture or U.S. stocks over the medium range. The so-called “fear index” crossed 25 on Wednesday, signaling a strong likelihood of higher than normal volatility over the next 30 days. VIX typically trades on a scale of 1-100 where 20 represents the long-term average. During the height of the most recent bull market, VIX has largely traded between 10-15 so the recent surge signals the start of a new pattern on Wall Street.

VIX closed above 24 on Thursday but remains in a firm uptrend this month. The index has posted a 12-month return of 101.6%, according to latest available data.

Global Stock Markets Post Mixed Results

Wall Street’s midweek rout spilled into Asia on Thursday, as Tokyo’s benchmark Nikkei 225 plunged 3.7%. Hong Kong’s Hang Seng Index was off by as much as 2.5% before settling 1% lower for the day. Down under, Australia’s benchmark S&P/ASX 200 Index booked a loss of 2.8%.

China’s mainland markets staved off another massive decline, with the Shanghai Composite Index closing flat. The CSI 300 Index of stocks in Shanghai and Shenzhen closed up 0.2%. China continues to be one of the world’s worst-performing stock markets. The Shanghai Composite Index is down a staggering 28% since late January, with losses continuing to mount following the Golden Week holiday earlier this month.

European markets turned their fortunes around Thursday after opening in the red. All major indexes from Madrid to Frankfurt finished in positive territory. The pan-European Stoxx 600 Index was up 0.5% by the close.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi