Tech Leads Stock Gains; Treasuries, Dollar Climb: Markets Wrap

Tech Leads Stock Gains; Treasuries, Dollar Climb: Markets Wrap. With the Federal Reserve decision out of the way, investors’ attention has turned back to corporate earnings and Friday’s jobs report.

The S&P 500 rose for a sixth straight day. The Nasdaq 100 outperformed after Qualcomm Inc., the world’s largest smartphone chipmaker, gave a stronger-than-expected outlook, adding to signs that the industry crunch is easing. Moderna Inc. jolted the market with sales and earnings that missed analysts’ estimates as it lowered its forecast for 2021 Covid-19 vaccine sales. Both Treasuries and the dollar advanced.

Fed Chair Jerome Powell announced a start to a reduction in bond purchases Wednesday, but said officials can be patient on raising rates. Applications for U.S. state unemployment benefits fell last week to the lowest since March 2020. The data precede Friday’s employment report, which is forecast to show nonfarm payrolls rose by 450,000 in October.

“There’s nothing that I heard yesterday from the Federal Reserve that would change our thinking,” Steve Chiavarone, portfolio manager at Federated Hermes told Bloomberg TV and Radio’s Surveillance. “You still have an environment where it’s risk-on for the time being.”

“So far this week we’ve gotten pretty good news on the labor market front,” said Mike Loewengart, managing director of investment strategy at E*Trade Financial. “With the Fed starting to take a step back from their accommodative stance, in aggregate, this could stand as another proof point of solid gains when it comes our economic recovery.”

The calm market reaction to the Fed’s taper announcement could well be the eye of a storm as traders refuse to back down from betting that central bankers are too complacent about the threat of out-of-control inflation. Demand strengthened for downside eurodollar hedges — a signal investors are eager for protection against more aggressive bets on further rate hikes.

Some other corporate highlights:

• Britain’s regulator became the first to approve Merck & Co.’s Covid-19 antiviral pill.
• Regeneron Pharmaceuticals Inc. posted strong results thanks to sales of its biggest-selling therapies and high demand for its Covid-fighting antibody cocktail.
• Video-streaming platform Roku Inc.’s results missed expectations on key metrics.

Elsewhere, the pound weakened after the Bank of England defied market expectations by keeping interest rates on hold, putting concerns about slowing growth above predictions for a spike in inflation.

Here are some events to watch this week:

• U.S. unemployment, nonfarm payrolls, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.4% as of 10:10 a.m. New York time
• The Nasdaq 100 rose 0.8%
• The Dow Jones Industrial Average was little changed
• The Stoxx Europe 600 rose 0.4%
• The MSCI World index rose 0.4%

Currencies

• The Bloomberg Dollar Spot Index rose 0.4%
• The euro fell 0.5% to $1.1550
• The British pound fell 1.2% to $1.3519
• The Japanese yen rose 0.2% to 113.83 per dollar

Bonds

• The yield on 10-year Treasuries declined six basis points to 1.55%
• Germany’s 10-year yield declined four basis points to -0.21%
• Britain’s 10-year yield declined nine basis points to 0.98%

Commodities

• West Texas Intermediate crude rose 1.6% to $82.18 a barrel
• Gold futures rose 2% to $1,798.50 an ounce

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