U.S. stocks registered more fresh record highs amid a broad-based rebound and Treasuries snapped an eight-day rally fueled by concerns about global growth amid the spread of Covid-19 variants.
The benchmark S&P 500 rose 1.1%, rebounding from the biggest one-day drop in about three weeks on Thursday. The Dow Jones Industrial, Nasdaq Composite, and Nasdaq 100 indexes also finished at all-time highs on the same day with the S&P for a second time this month. Financial shares led the gains with rising yields increasing the outlook for profits. The dollar weakened against a basket of major currencies and oil gained for a second day.
“The market is still on a positive trajectory and obviously there are going to be bumps along the way,” said Leslie Thompson, managing member of Spectrum Management Group.
JPMorgan Asset Management, BlackRock Inc., and Morgan Stanley Wealth Management — which together account for some $12 trillion in assets — are among money managers betting global growth is still on track, with second-quarter earnings season starting next week set to bolster confidence. China’s central bank cut the amount of cash most banks must hold in reserve, while the European Central Bank on Thursday indicated it will tolerate an inflation overshoot, implying an even longer period of the loose policy.
“It shows how schizophrenic the market can be,” said Norm Conley, chief executive officer of JAG Capital Management. “Only 60 days ago the narrative was that not only was the economy recovering, but it was also recovering too fast — here we are now”.
The 10-year Treasury yield still posted a second consecutive weekly decline. The 30-year yield broke below 1.90% on Thursday for the first time since February.
Meanwhile, tension between the U.S. and China continues to bubble. Washington added 34 Chinese entities to its economic blacklist over alleged human rights abuses and high-tech surveillance in Xinjiang.
Elsewhere, Biogen shares fell after the head of the U.S. Food and Drug Administration said she is seeking a federal investigation of the approval of the Alzheimer’s disease drug Aduhelm, a highly unusual step that will increase scrutiny of a heavily criticized clearance.