Stocks hedges pay off after another week of wild market swings

A tense stretch for Wall Street that capped a 20% drop in the Nasdaq 100 and a correction for the S&P 500 somehow ended with another big twist: Both indexes turning on a dime to finish the week higher.

A tense stretch for Wall Street that capped a 20 per cent drop in the Nasdaq 100 and a correction for the S&P 500 somehow ended with another big twist: Both indexes turning on a dime to finish the week higher.

While the S&P 500 led a powerful market bounce Friday to close 2.2 per cent higher, the reversal in the Nasdaq 100 is even more striking. After falling as much as 21 per cent below its November high in the Thursday session, the gauge has clawed back 8 per cent.

The dip-buying impulse’s arrival, even as Russia launched a full-scale invasion of Ukraine, is the latest head-scratcher for investors caught off guard by the lurch lower in major benchmarks this year.

But the military crisis has made clear several key investing trends that may have room to run. 

One: A cohort of traders is rediscovering their fondness for Big Tech at a time of global stress, partly on a bet the Federal Reserve will be less aggressive in its tightening path.

“This was obviously a big shock, but the shock has boosted bets that the Federal Reserve will have more options in how fast it’s going to act,” said Ben Emons, managing director of global macro strategy at Medley Global Advisors in New York. “As a result of that, bulls are coming back from the sidelines, and money is rushing to the sector that was beaten down the most -- tech companies with stable balance sheets and strong fundamentals.”