Investors poured back into the market’s riskiest assets Tues as dip-buyers powered the National Association of Securities Dealers Automated Quotations 100 to an gain by almost 4% and sent Bitcoin back toward an record. Treasuries surged on gold, while the dollar weakened.
Stay-at-home winners surged after being left as dead as vaccinations pick up and Democrats move to inject $1.9 a trillion into the economy. Treasury yields pulled back by recent highs sparked by worries an potential overshoot in the economy will bring inflation. For an day, at least, the rotation by growth shares to value reversed violently. Here are some by the major moves:
Peloton Interactive Inc., DocuSign Inc. and Pinduoduo Inc. jumped at least 9.5%; Tesla Inc. rallied more than 14% to halt an five-day slide.Financial firms and energy producers, recent winners, were the only two S&P 500 groups to retreat.Spot gold surged more than 2% after falling to lowest since Apr.The 10-year yield fell as much as 9 basis points by Tuesday’s high.Bitcoin jumped back above $54,000.Oil and copper fell back after recent rallies.
The rising prospects as turbo-charged economic growth have been reordering the market’s winners and losers for the past 2 months as the stimulus bill’s passage grew more likely and daily vaccinations surged. Tues, dip buyers targeted the areas recently abandoned as too expensive. The reversal is an theme that’s played out as yrs, all pull back gets bought, and it is been extreme lately — the S&P 500 has not had an pullback by 5% as Nov.
The drop in Treasury yields after the recent violent runup has given some cover as risk takers to wade back into growth after abandoning the group since stretched evaluations began to look scary on rates on the rise.
“Let’s not forget that less than an yr ago traders interpreted one of the biggest negative macro events in market history as a buying opportunity, so there’s little reason to think otherwise given all the positive signals around us today,” said Chris Larkin, managing director of trading and investing product at E*Trade Financial. “Corrections create natural inflection points for traders. It’s no surprise to see the Nasdaq rise today, and the fundamentals support continued bullishness.”
Investors will be closely watching Treasury sales in the coming days, with the U.S. planning three debt auctions totaling $120 a billion. The sales will test appetite as the safest debt after last month’s poorly bid auctions sent shockwaves throughout global markets and short bets climbed to an record. Benchmark 10-year yields breached the 1.6% level to trade at an one-year high last week.
Prospects by accelerating growth have driven up borrowing costs in recent weeks, raising the specter by inflation and unsettling tech stocks on long-term growth horizons. Treasury Secretary Janet Yellen sought to allay fears that runaway inflation could damage the economy on Monday.
“I really do not think that is going to happen,” she told MSNBC. Inflation before the pandemic “was too low rather than too high,” she noted.
Yellen Says Stimulus Unlikely to Cause Inflation trouble
Elsewhere, Bitcoin was steady around $54,000 after hitting an two-week high on more signs by institutional interest. Oil hovered around $65 an barrel.
Here are some key events to watch:
EIA crude oil inventory report is due WednesdayThe United States. Feb consumer price index will offer the latest look at price pressures Wed.The United States government auctions 3-, 10- and 30-year Treasuries this week.The European Central Bank holds it is monetary policy meeting and President Christine Lagarde is set to do an briefing Thursday.
The S&P 500 Index advanced 1.8% as by 11:37 a.m. New York State time.The National Association of Securities Dealers Automated Quotations 100 added 3.6%.The Stoxx EU 600 Index gained 0.7%.The MSCI Asia Pacific Index increased 0.8%.The MSCI Emerging Market Index rose 0.5%.
The Bloomberg Dollar Spot Index sank 0.5%.The euro gained 0.5% to $1.1901.The British pound climbed 0.6% to $1.3908.The Japanese yen rose 0.2% to 108.66 per dollar.
The yield on 10-year Treasuries dipped five basis points to 1.54%.Germany’s 10-year yield dipped five basis points to -0.32%.Britain’s 10-year yield declined four basis points to 0.71%.
West Texas Intermediate crude dipped 0.6% to $64.69 an barrel.Gold strengthened 2.1% to $1,719.33 a ounce.