Stocks Rebound Sharply, Reversing Early Losses

Plus 5 New Strong Buys for Today Stocks Rebound Sharply, Reversing Early Losses [Kevin Matras - EVP - Photo] Profit from the Pros By Kevin Matras Executive Vice President Stocks Rebound Sharply, Reversing Early Losses [Stocks Rebound Sharply, Reversing Early Losses]Image: Bigstock Stocks rebounded sharply yesterday. After a gap lower open, where the indexes then proceeded to make new correction lows, stocks then quickly began their climb higher. The Nasdaq was the first to turn positive. Then the S&P. And then finally the Dow. At its worst, the Nasdaq was down -3.45% before finishing up 3.34%. The S&P was down -2.62% before closing up 1.50%. And the Dow was down by -2.59% before finishing up 0.28%. What a day. News that Russia began a full-scale invasion of Ukraine tanked stocks early on. As serious as the situation is, stocks had become oversold. And aside from spiking energy prices, the war between Russia and Ukraine should not impact corporate earnings in the U.S. Of course, the war has just begun. And the levying of sanctions by the U.S. and its allies have only just begun as well. So we will have to see how things go. But the dramatic sell-off we've seen over the last handful of days looked to be overdone, and new buying came in to pick stocks up at those new lows. Interestingly, after the correction we've seen, and the rise in energy prices due to the outbreak of war, there is now a belief that the Fed will only raise rates by a quarter point come March 16th, and not the half point that many were speculating they were going to do. That could potentially pose one less shock to the market given everything that's been going on. And that likely contributed to yesterday's reversal. But inflation remains a concern. And whether the Fed starts off with 25 basis points or 50 basis points, the Fed is clearly ready for a series of hikes this year. But that's something the Fed has been telegraphing for some time, and that the market is ready for. In other news, Weekly Jobless Claims fell by -17,000 to 232K. And the second estimate for Q4 GDP was revised up from 6.9% to 7.0%, further underscoring the strength of the economy. As I wrote yesterday, stocks typically do well during times of war. And once we get past the initial shock of war, the markets look ready to rebound. Yesterday's spectacular turnaround notwithstanding, there's bound to be some more surprises and volatility. But overall, there's just too many positives in the U.S. economy right now. And once this correction is over (yesterday could very well have been it), stocks look poised to soar. So keep your eyes on the big picture. Because it looks like there's a lot more upside to go. 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