Tech rally turns around sag­ging stocks

Houston Chronicle - - MARKET SUMMARY - By Vil­dana Ha­jric and Sarah Pon­czek

Stocks rose the most in six months Fri­day as tech­nol­ogy shares, which led the long­est rout in U.S. stocks in al­most two years, bounced back to push ma­jor in­dexes higher. Trea­suries fell, and the dollar rose with oil.

The S&P 500 In­dex gained 1.4 per­cent in the fi­nal hour of a wild up-and­down ses­sion, with trad­ing 30 per­cent above av­er­age, to post its best per­for­mance since April 10. The bench­mark had all but erased a morn­ing rally that reached 1.7 per­cent, only to bounce higher af­ter JP­Mor­gan an­a­lysts said that selling forced by com­puter-driven strate­gies had likely run its course. Volatil­ity ruled, though, with the in­dex mak­ing an­other run at wip­ing out the gain be­fore re­sum­ing its climb.

Tech­nol­ogy buoyed all the ma­jor av­er­ages, with the Nas­daq 100 In­dex ris­ing 2.8 per­cent just two days af­ter its worst rout since 2011. Net­flix Inc. ral­lied 6 per­cent amid an “opportunistic up­grade” from an­a­lysts at Cit­i­group Inc. Ac­tivi­sion Bl­iz­zard Inc. drove gains in gam­ing shares af­ter re­leas­ing a new ver­sion of “Call of Duty.” The 10-year Trea­sury yield rose for the first time in three days, reach­ing 3.17 per­cent. Still, ris­ing in­ter­est rates weighed on banks even af­ter mostly pos­i­tive earn­ings re­ports from JP­Mor­gan Chase, Cit­i­group Inc. and Wells Fargo. The group was down al­most 5.5 per­cent for the week.

The rea­sons for Fri­day’s rally were as var­ied as for the week­long pound­ing. Trade data from China helped ease con­cerns about global growth, while signs emerged of re­lax­ing ten­sions with the U.S. amid a planned meet­ing be­tween the coun­tries in Novem­ber and the Trea­sury Depart­ment’s de­ter­mi­na­tion that China isn’t ma­nip­u­lat­ing its cur­rency. Re­lief that bank earn­ings weren’t bad cooled anx­i­ety that cor­po­rate prof­its might not live up to lofty ex­pec­ta­tions amid higher costs from the Trump tar­iffs.

“Solid bank earn­ings, Chi­nese trade data and ex­ces­sively over­sold con­di­tions is charg­ing the eq­uity re­bound,” Ben Emons, chief econ­o­mist at In­tel­lec­tus Part­ners LLC, wrote in an emailed note. “All of these set in mo­tion what you could dub as a ‘stock re­fla­tion’ trade af­ter sev­eral days of bru­tal moves.”

The rally, which came af­ter two days of mar­ket tu­mult, was global, with the MSCI All-Coun­try World In­dex adding more than 1 per­cent. The MSCI Asia Pa­cific In­dex climbed from the low­est level since May 2017. Euro­pean shares, how­ever, slid into the close, with the Stoxx 600 In­dex turn­ing neg­a­tive to erase a gain that reached al­most 1 per­cent and cap its worst week since Fe­bru­ary.

De­spite the strong per­for­mance, the S&P 500, Nas­daq 100 and Dow Jones In­dus­trial Av­er­age had their worst week since March.

Earn­ings re­main key as third-quar­ter re­ports from U.S. com­pa­nies will show whether the Trump ad­min­is­tra­tion’s tax breaks are still boost­ing cor­po­rate prof­its.

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