Tech rebound pulls stocks out of slump and to gain
Wall Street capped a volatile day of trading Friday with a broad rally that snapped the market’s threeday losing streak.
The S&P 500 gained 2% after clawing back from a 1% skid that followed a 1% surge at the start of trading. Other stock indexes went through similar zigzags, but finished with solid gains.
The late-afternoon turnaround made up for some of the losses that the market began racking up after kicking off the week with the S&P 500’s biggest gain since June. The index, which briefly slipped into the red for the year on Thursday, managed to end the week 0.8% higher, its first weekly gain in three weeks.
The market’s latest gyrations came as investors struggled to figure out what an encouraging report on the economy and the recent march higher for bond yields should mean for the market.
“Ultimately, investors will conclude that they’ll be happy to take the bad with the good,” said Sam Stovall, chief investment strategist at CFRA. “The bad thing being higher interest rates and the good being an improvement in the economy.”
The S&P 500 rose 73.47 points to 3,841.94. The Dow Jones Industrial Average gained 572.16 points, or 1.9%, to 31,496.30. Earlier, it had been down 157 points. The Nasdaq composite climbed 196.68 points, or 1.6%, to 12,920.15. The techheavy index earlier flipped between a gain of 1.2% and
a loss of 2.6%.
Smaller company stocks outgained the broader market, as they have all year. The Russell 2000 index picked up 45.29 points, or 2.1%, to 2,192.21.
The spark for all the uncertainty Friday was a government report that showed employers added hundreds of thousands more jobs last month than economists expected. That’s an encouraging sign for the economy, and it helped lift Treasury yields, with the closely watched 10-year yield momentarily topping 1.60%.
The yield later fell back from that midday spike and wound up at 1.56%, only slightly higher than a day earlier. It remains well above its roughly 0.90% level at the end of last year.
While the jobs report was encouraging in terms of jobs added by the economy, wage growth — an inflation bellwether — rose last month in line with expectations. That may have helped ease some bond investors inflation worries, at least for now.
“That sort implied, ‘OK, at least this report doesn’t point to a surge in inflation,” Stovall said.
That view could change next week, when the government issues its latest consumer and wholesale price data.
For about a year, the stock market kept climbing on expectations that an economic recovery was on the way, even when the coronavirus pandemic meant conditions at the time seemed very bleak. Now that the recovery is much closer on the horizon, the market is unsettled because one of the main underpinnings for that incredible run is under threat: ultralow interest rates.