Stocks plunge as investors await Fed meeting

Yahoo Finance's Jared Blikre details intraday market sell-offs, historical contexts of past markets, and underperformances seen in the Nasdaq.

Video transcript


BRAD SMITH: Major averages in the red just around lunchtime here, everyone, as you're keeping an eye on the major averages as to [INAUDIBLE]. The Dow, the NASDAQ, and the S&P 500, they are all in negative territory as of right now. And this is as this market volatility that we've been tracking over the past two days, it has persisted despite yesterday's close in positive territory.

And with more on this, we want to bring in Yahoo Finance's Jared Blikre, who's standing by. And Jared, perhaps we start with the activity we saw towards the end of yesterday's session and whether or not there was actually tech trying to set in a bottom, yet seeing more declines here on the day.

JARED BLIKRE: Well, I'm not going to sugarcoat this, Brad. It was a short covering rally, but guess what? All major rallies begin with a little bit of short covering. But yesterday's was so fast and furious, it really stands out in history.

I'm publishing an article about this in about an hour, so I went back. First of all, let me just show the price action that we're seeing today because things looked a little bit rosier yesterday. We had that big, green hammer candle on the Dow, also the S&P 500, but pretty much selling off today. And we're seeing the same kind of illiquid situation that we have been over the past few sessions. Here's a NASDAQ composite-- looks fairly similar-- and the S&P 500.

Now, let me show you what I tweeted last night, and this is what I'm writing about today. I went through the big reversal days in the Dow going back to 1929 because I have data going all the way back then. NASDAQ only goes back about 50 years. What I found was big reversal days in stocks, they can signal a bottom or simply another leg down in the weighting.

The difference-- very limited sample size-- seems to be how much the market was down just prior to the reversal. This time, the drawdown was very small. So time for the Powell magic show Wednesday. But that was before today's price action, which is pouring a little bit of cold water onto our hopes.

So these are the big reversal days going back to 1929. There are 13 of them, and there is a really quick one that actually worked out for a nice bounce here. That was in March of 1929. But as we know, the liquidity spigots were on back then, not because of Powell, but because of some other Fed chairs.

And then in November of 1929, the market was down 39%. We had a big reversal day like we did yesterday, but guess what? The market went down another 83%, would not reach another record high for 6,256 days in 1954.

I just want to point out that the results are very varied right now, and so it's hard to draw too many conclusions from this. It is nice that we weren't down too much yesterday. But at this point, I think it's fair game to say that anything can happen.

So just taking a look at the NASDAQ 100, this is where we're sitting for the day. But I just want to put on a heat map that shows where we are from the beginning of the year. And we're seeing some substantial, substantial drawdowns still.

Nvidia up 25%. Apple, the least bad off of the mega caps, that's still down 11%, going to get their earnings on Thursday. And then Microsoft earnings after the bell, that's down 14%. So got to kind of play wait-and-see mode, I think, until at least we get that Powell presser tomorrow at 2:30.

AKIKO FUJITA: We'll all be watching closely. Jared, thanks so much for--