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`Surprised' Tech Bulls Pace Stock Gain; Bonds Rise: Markets Wrap

Updated on
  • U.S. 10-year yields declined for the first time in nine days
  • Facebook, AMD earnings eased some concern in tech sector
Mike Siegel of Goldman Sachs says the markets are seeing levels of “normalized” volatility.

U.S. equities rose, with technology shares rallying after strong earnings from Facebook Inc. and Advanced Micro Devices Inc. offered a reprieve for bulls. The yield on 10-year Treasuries fell below 3 percent.

The Nasdaq 100 Index surged 2.1 percent, with Facebook notching its best day in two years and AMD lifting beleaguered chipmakers. Intel Corp. reports after the U.S. close. Rate-sensitive shares advanced as the 10-year yield fell for the first time in nine days. Crude oil rose and gold declined.

“The wave of earnings are finally getting to the right place,” said Omar Aguilar, chief investment officer for equities at Charles Schwab Investment Management. “It has been a market where the good news on earnings and the good news on the economy have been offset by these rising yields on the fixed income side, and it’s just that that has created extra volatility.”

“Everyone is surprised at how well these companies are posting their performance through this earnings period,” said Kevin Miller, chief executive officer of Minnesota-based E-Valuator Funds. “Two things drive markets: One is fundamentals, and two is emotion.”

In Europe, the common currency declined after the central kept interest rates unchanged and ECB President Mario Draghi said growth in the euro area is expected to remain solid, albeit with some moderation. European bonds tracked the jump in Treasuries, while the Stoxx Europe 600 Index posted its first increase in three days. Earlier in Asia, shares in Korea and Japan rose as those in China and Hong Kong fell.

Clearing the Hurdle

U.S. stocks have historical pattern of moving higher along with interest rates

Source: LPL Financial

Average increase: 9.5%. Median increase: 5.4%.

Elsewhere, aluminum climbed and Alcoa Corp. gained. Oleg Deripaska plans to keep control of United Co. Rusal even as the Russian aluminum giant battles for survival in the face of harsh U.S. sanctions, according to people familiar with the matter.

These are some important events remaining this week:

  • U.S. GDP data are due Friday.
  • Earnings season continues, with Amazon.com among those due to report.
  • The Bank of Japan announces its latest policy decision Friday and releases updated economic projections.
  • The leaders of North and South Korea meet Friday.

And these are the main moves in markets:

Stocks

  • The S&P 500 Index rose 1 percent as of 4:03 p.m. New York time, while the Dow Jones Industrial Average gained 1 percent and the Nasdaq Composite Index increased 1.6 percent.
  • The Stoxx Europe 600 Index climbed 0.9 percent and the MSCI Asia Pacific Index rose less than 0.1 percent.
  • The U.K.’s FTSE 100 Index increased 0.6 percent.
  • The MSCI Emerging Market Index jumped 0.5 percent, the first advance in a week.

Currencies

  • The Bloomberg Dollar Spot Index gained 0.2 percent, reaching another three-month high.
  • The euro eased 0.5 percent to $1.2105.
  • The British pound fell less than 0.1 percent to $1.3919.
  • The Japanese yen gained less than 0.1 percent to 109.34 per dollar, the first advance in more than a week.

Bonds

  • The yield on 10-year Treasuries decreased four basis points to 2.99 percent, the first retreat in more than a week and the biggest tumble in almost three weeks.
  • Germany’s 10-year yield sank four basis points to 0.59 percent.
  • Britain’s 10-year yield decreased four basis points to 1.50 percent.

Commodities

  • West Texas Intermediate crude rose 0.2 percent to $68.20 a barrel.
  • Gold fell 0.4 percent to $1,318 an ounce. 
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