The S&P 500 and Nasdaq Composite indexes both gained Friday afternoon, with the S&P 500 and Nasdaq Composite closing in record territory, marking a turnaround from the previous session, which was marred by concerns over the global economy’s recovery from the pandemic. What are the major indices performing these days?
The Dow Jones Industrial Average DJIA, +1.28 percent, climbed 426 points, or 1.2 percent, to 34,848 points.
The S&P 500 SPX, +1.07 percent rose nearly 44 points, or 1%, to 4,364, putting the broad-market benchmark in record-close territory, thanks to a 2.6 percent gain in financials XLF, +2.82 percent, and a 1.8 percent gain in materials XLB, +1.93 percent.
The Nasdaq Composite Index COMP, +0.88 percent gained 127 points, or 0.9 percent, to close at 14,687, a new high.
The Russell 2000 index RUT, +2.08 percent of small-capitalization companies was up 1.9 percent.
Stocks fell on Thursday, although they ended the day off their session lows. After plummeting more than 500 points at its session low, the Dow finished 259.86 points lower, or 0.7 percent, at 34,421.93. The S&P 500 ended the day 0.9 percent lower, while the Nasdaq Composite dropped 0.7 percent, a day after both indices set new highs.
Stats for the week The Dow and S&P 500 were on track to gain 0.2 percent and 0.3 percent, respectively, this week. After starting Friday morning on track for a weekly fall of 0.3 percent, the Nasdaq was looking at a weekly gain of nearly 0.3 percent. All three benchmarks would be up for the third time in a row. Meanwhile, the Russell 2000 was set to drop 1.4 percent for the second week in a row. What is the market’s driving force? Bullishness returned to Wall Street on Friday afternoon. Following a drop in stocks on Thursday due to concerns about global growth prospects as some countries grappled with the coronavirus epidemic, the stock market was showing a strong return. Concerns about the epidemic were blamed, along with a slew of other factors, for a recent rise in US Treasury bonds that brought long-term yields to their lowest levels since February. However, yields began to rise again on Friday, with the 10-year U.S. Treasury yield TMUBMUSD10Y, 1.358 percent rising 5.1 basis points to 1.349 percent. On Thursday, the yield fell below 1.25 percent for the first time in five months. In a phone interview Friday, Jeff Kleintop, chief global investment strategist at Charles Schwab, described it as a “fight between the increase of the delta variation vs the rise of the earnings season.” The corporate earnings season is about to start next week, he added, leaving investors to balance growth predictions against concerns that the spread of the delta form of Covid-19 could stall or reverse global economic reopenings. Some investors and experts believe that the stock market’s recent surge masks underlying issues. “I believe the market has been and remains perplexed. It can’t decide whether it wants bad economic news, which means more easy money but also potentially more inflation, or good economic news, which means Fed tapering sooner rather than later but also potentially flatter markets, tighter credit, and weaker earnings,” said Randy Frederick, vice president of trading and derivatives at the Schwab Center for Financial Research. He predicted, “This conflict will continue until earnings season picks up and provides a needed distraction.” According to FactSet analysts, the S&P 500 index is predicted to witness a 63.6 percent growth in earnings in the second quarter compared to the previous year, which would be the greatest 12-month gain since the fourth quarter of 2009. In a single graph: As the second-quarter reports begin to roll in next week, get ready for a burst of profit increase. Meanwhile, coronavirus-related restrictions in Asia and Europe have been tightened. A day after Japan declared a state of emergency that practically excludes spectators from the 2020 Olympics, Seoul’s pandemic alert was raised to its highest level, the Netherlands announced fresh steps, and social-distancing laws were strengthened in Sydney. While the spread of the delta variant of the coronavirus that causes COVID-19 was cited as one of the reasons for concerns about the global economic outlook, some analysts questioned whether the fight against the pandemic in some Asian and emerging market countries in particular would be enough to derail the global equity market rally. Read more: What caused the stock market to plummet? Bond yields are falling, indicating a ‘growth scare.’ In the end, according to Ipek Ozkardeskaya, senior analyst at Swissquote, lowering yields should be a good for equities. Falling rates suggest that inflation and the possibility of the Federal Reserve withdrawing its easy money policies more aggressively than expected are no longer a reason for concern, she added. “The market discourse is obviously transitioning from transitory inflation to transitory recovery, and that’s probably what keeps Treasury inflows elevated, paired with a typically low issuance of Treasurys in July and the Fed returning to the market after the July 4 holiday,” the analyst added. As a result, the most rational market reaction is decreasing Treasury yields and rising equities prices, albeit it’s worth noting that this time, rising COVID concerns are accompanied by rising COVID cases,” Ozkardeskaya stated. Meanwhile, the Biden administration issued a new executive order on Friday to combat anticompetitive behaviors, particularly in the technology industry. The directive covers a dozen government agencies and includes 72 measures and suggestions. In other news, the People’s Bank of China stated on Friday that it was lowering reserve requirements for its banks to help the world’s second-largest economy. The Reserve Requirement Ratio, or RRR, would be reduced by a half point to a weighted average of 8.9%, the PBOC announced on July 15. In economic news, wholesale inventories in the United States increased 1.3 percent in May, compared to 1.1 percent projected by economists on average, indicating that stocks are still tight due to supply-chain bottlenecks and increased demand in the aftermath of the pandemic. “We know that firms are concerned about low inventory levels,” Kleintop added. However, the “inventory-to-sales ratio” increased slightly, indicating that enterprises are acquiring the goods they need, he said. “It’s not as awful as it was in March or April,” he added, adding that the ratio is still “fairly low.” In March, the inventory-to-sales ratio in the United States reached a new low. “I’m becoming less anxious that the Fed would have to do anything aggressive,” Kleintop added, as inflationary pressures appear to be easing. Which businesses are being scrutinized?
Philip Morris International Inc. PM, +1.19 percent announced plans to purchase Vectura Group PLC, a U.K. pharmaceuticals company specializing in inhaled medications, for $1.24 billion in cash, as part of its attempt to diversify its business beyond tobacco and nicotine. In Friday afternoon trade, Philip Morris stock was up 1.1 percent.
Levi Strauss & Co. LEVI, +1.52 percent after the jeans manufacturer released results that beat Wall Street expectations and boosted its full-year projection late Thursday. The company’s stock was up 2.1 percent.
According to a report from Reuters on Friday, Stripe has recruited Cleary Gottlieb Steen & Hamilton LLP to help it arrange for an initial public offering.
United Airlines Holdings Inc. (UAL) stock was in focus on Friday as the airline announced it was adding roughly 150 flights to warm-weather destinations in the United States, as well as expanding service to Mexico, the Caribbean, and Central America, as the recovery from the COVID-19 pandemic continues.
The stock of United Airlines was up 2.8 percent.
Altria Group Inc. MO said on Friday that it has agreed to sell its Ste. Michelle Wine Estates business for $1.2 billion to private equity company Sycamore Partners Management LP.
Altria’s stock increased by 1.7 percent.
The FDA and the Centers for Disease Control and Prevention warned on Thursday that there is no scientific evidence that COVID-19 booster injections are necessary, just hours after pharmaceutical Pfizer PFE said it will seek approval for a Covid booster shot to help contain the Delta version. Pfizer’s stock was up 1.1 percent.
Stamps.com Inc. is a company that sells stamps online.
STMP stated on Friday that it has reached an agreement to be acquired by software investment firm Thoma Bravo in a cash transaction valued at $6.6 billion. The stock increased by over 64%.
What about your other assets? How are they doing?
The ICE U.S. Dollar Index DXY, which compares the currency to six main competitors, was down 0.3 percent.
On Friday, oil futures jumped considerably higher, with the US benchmark CL00 rising 2.1 percent to $74.45 a barrel. At $1,810.60 an ounce, gold GC00 finished 0.6 percent higher.
Following Thursday’s losses, European equities rebounded, with the Stoxx Europe 600 SXXP climbing 1.3 percent for a weekly gain of 0.2 percent and London’s FTSE 100 UKX finishing 1.3 percent higher for a weekly loss of 0.02 percent.
In Asia, the Shanghai Composite SHCOMP fell less than 0.1 percent but gained 0.2 percent for the week, Hong Kong’s Hang Seng Index HSI increased 0.7 percent on the session but lost 3.4 percent on the week, and Japan’s Nikkei 225 NIK fell 0.6 percent on Friday, contributing to a 2.9 percent weekly decline.
This article was written with the help of William Watts./n
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