Wall Street ended a winning streak of four sessions on Friday, with the Dow Jones Industrial Average closing above 35,000 for the first time after another string of strong gains, helping investors put Monday’s sudden sell-off in the rearview mirror.
Cautious optimism on rising coronavirus cases drove key benchmarks up in a slow but steady rally that culminated in weekly profit and new intraday highs. Stocks managed to extend an unlikely winning streak to 4 days, with the S&P 500 (^ GSPC) and Nasdaq (^ IXIC) both adding over 1% on the day. The Dow (^ DJI) closed above the psychologically critical level of 35,000 and rose about 0.7% during the session.
The dizzying turnaround after hitting Monday was part of the market’s attempt to calibrate a resurgence of COVID-19 cases against a fiery economic expansion that continues to gain momentum.
“What I would say is look both bottom-up and top-down. The way the market is currently valued is still in the early stages of recovery,” said Binky Chadha, chief strategist Deutsche Bank, opposite Yahoo Finance Live on Friday.
Sentiment took a hit after Thursday’s data showed an unexpected surge in jobless claims, which last week marked a new pandemic-era low. New jobless registrations rose to 419,000 last week, well above the consensus estimate of 360,000.
Since the beginning of COVID-19, the data series has served as an avatar of labor market health and could take on new meaning if rising infections trigger new restrictions – which could lead to another round of job losses.
“We don’t expect this new surge to weigh on economic activity even if hospital admissions continue to rise,” said Paul Ashworth, North American chief economist at Capital Economics.
“But there is now a risk that other states could be affected, including those with higher vaccination rates, which could have more serious economic consequences,” he added.
The story goes on
On Friday, investors digested data from the services and manufacturing sectors that highlighted the strength of the economy, but showed that the sector grew more modestly than expected. Markit’s preliminary US manufacturing PMI for July was below expectations at 59.7 compared to 63.7 a month earlier. A reading above 50 means growth.
Strong gains have helped the market rebound from Monday’s pandemic-inspired meltdown, with investors looking at fundamentals rather than rising coronavirus numbers. Investors will now look to the Federal Reserve’s policy meeting, at which the central bank may hint at a slowdown in bond purchases and reaffirm the outlook for rising inflation.
This week, industry leaders Netflix (NFLX), Chipotle (CMG), Coca-Cola (KO), Johnson & Johnson (JNJ) and Verizon (VZ) beat market expectations, fueling a market that has barely seen any downtrend in the past few months.
On Thursday, Intel (INTC), Twitter (TWTR), Snap (SNAP) – the parent company of Snapchat, Southwest (LUV) and AT&T (T), joined the brigade of better-than-expected earnings results, with both companies benefiting from the surge Demand for the lockdown.
Monday’s sell-off briefly moved into the spotlight of quarterly earnings, which almost consistently reflected a strong recovery. The rising number of cases powered by the Delta variant – a more transmittable form of COVID-19 – has propelled the Dow (^ DJI), Nasdaq (^ IXIC). and S&P 500 (^ GSPC) at its biggest drop in months.
Significantly less enthusiastic, however, are the signals emanating from the bond market. Analysts have indicated that safe haven Treasury bond yields have been the biggest beneficiary of COVID-19 fears after skyrocketing in recent weeks on fears of inflation.
It suggests that investors might park cash in bonds as inflation or slowdown get nervous, or feel weakness on the horizon – which may or may not be driven by the persistent persistence of COVID-19.
4:01 p.m. ET: Stocks close the troubled week on a good note
Here key benchmarks ended the session:
S & P-500 (^ GSPC): 4,411.78, +44.30 (+1.01%)
Dow (^ DJI): 35,061.55, +238.20 (+ 0.68%)
Nasdaq (^ IXIC): 14,836.99, +152.39 (+1.04%)
Raw (CL = F): $72.03 per barrel, +0.12 (+0.17%)
Gold (GC = F): $1,801.60 per ounce, -3.80 (-0.21%)
10-year treasury (^ TNX): Gives +0.21 bp 1.2860%
12:15 p.m. ET: stocks hold gains, S&P trades marginal new record
Here are the prices at noon ET:
S & P-500 (^ GSPC): 4,404.09, +36.61 (+ 0.84%)
Dow (^ DJI): 35,028.45, +205.10 (+ 0.59%)
Nasdaq (^ IXIC): 14.801.86, +117.27 (+ 0.80%)
10:00 a.m. ET: Dates: Manufacturing, Services are feeling overhang from supply bottlenecks
US business grew at a moderate pace for the second straight month in July amid supply constraints, suggesting a slowdown in economic activity after an expected robust second quarter. IHS Markit’s Flash US Composite PMI Output Index, which tracks the manufacturing and service sectors, fell from 63.7 in June to a four-month low of 59.7.
9:50 a.m. ET: China stocks pounded amid government action
A man looks at the Pudong financial district of Shanghai, Nov. 20, 2013. With a change in tone and language, China’s central bank governor has promised the prospect of accelerated currency reform and more scope for setting the yuan exchange rate, he stressed, and broader plans for a comprehensive economic change. Zhou Xiaochuan’s central bank has consistently announced its intention to liberalize financial markets and allow the yuan to trade more freely, even before the top leadership of the Communist Party unveiled the boldest economic and social reforms in nearly three decades late last week. REUTERS / Carlos Barria (CHINA – Tags: BUSINESS CITYSCAPE TPX PICTURES OF THE DAY)
Investors are moving the wood into Chinese stocks after Beijing sought more control over public companies. Ever since the Chinese government hit Didi with the hammer, the sector, which is threatened with increased fines, has been increasingly scrutinized. The stock sags in early trading, down over 17% for the day and more than 50% below its 52-week high.
9:30 a.m. ET: Stocks pop at the opening bell
The markets were here from 9:30 a.m. onwards:
S & P-500 (^ GSPC): 4,387.10, +19.62 (+0.45%)
Dow (^ DJI): 35,038.02+214.67 (+ 0.62%)
Nasdaq (^ IXIC): 14,699.16, +14.56 (+ 0.10%)
Raw (CL = F): $71.82, -0.09 (-0.13%)
Gold (GC = F): $1,802.10 per ounce, $ -3.30 (-0.18%)
10-year treasury (^ TNX): +4.1 bps to generate 1.312%
7:15 a.m. ET Friday: Stock futures remain green
Here were the key moves in the markets as of 7:15 a.m. Eastern:
Dow futures (YM = F): 34,873.00, +164.00, (+0.47%)
Nasdaq Futures (NQ = F): 15,001.75,+73.25 (+ 0.49%)
S&P 500 futures (ES = F): 4,380.75, +21.25 (+ 0.49%)
7:21 p.m. ET Thursday evening: Win stock futures
Here were the key moves in the markets as of 7:21 p.m. ET:
Dow futures (YM = F): 34,765, +56
Nasdaq Futures (NQ = F): 14.975, +47.75
S&P 500 futures (ES = F): 4,370, +10.25
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Javier David is an editor at Yahoo Finance. Follow Javier on Twitter: @TeflonGeek
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