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From the beginning of this month, the indexes go down significantly and then rise up significantly. Is it caused by institutions or billion dollar investors buy and sell stocks in billions? Or it some type of arrangement at the stock exchange to temporarily stop the selling or buying to avoid a large drop due to some market fear?

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    It's all regular market forces of supply and demand. Supply and especially demand fluctuate based on macroeconomic factors. Poor jobs report? Future outlooks get worse for many industries, lowering demand for shares. Stimulus money checks signed into law? More money available to buy shares increases demand. And so on.
    – Daniel
    Mar 12, 2021 at 13:05

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There are a number of possible reasons to explant the latest performance

  • after reaching high points many investors will realize some gains by selling shares. This causes markets to dip a bit
  • there might be some sector rotation going on. After lockdown measures were introduced worldwide a year ago, stocks markets recovered quickly. But this is only half of the story. Looking behind the aggregate of the index, this recovery was mostly performed by tech companies. Look at this chart plotting the NASDAQ composite against the S&P500. You can clearly see that tech took off and vastly outperformed the S&P500. And do not forget that there are a lot of heavy weight tech stocks that are part of both indexes. In fact the non-tech sector has performed a lot worse than the tech sector. With the end of lockdowns coming near, people seem to sell tech stocks and by industrial stocks.

nasdaq vs s&p500

  • Interest rates are rising. See the following chart for 10 years US treasury bonds which shows a sharp increase lately. With higher interest for government bonds there are two effects. First, a lot of institutional investors struggled to get any return with low interest rates and had to invest in the stock market although their risk level would rather prefer bonds. Second, a rising interest for a risk free investment means that high priced stocks are no longer exhibiting a healthy risk premium. This is corrected by stock prices falling. The tech sector has a lot of stocks with high P/E multiples and therefore high growth expectations.

treasury bonds yield

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