Stocks Close at Record Highs; Bond Yields Tumble: Markets Wrap

U.S. stocks jumped to record highs with retail sales and weekly jobless claims data signaling an accelerating recovery in the world’s biggest economy. Yields on benchmark 10-year Treasury notes dropped the most since February.

The S&P 500 advanced to an all-time high, led by the real estate, health care and technology sectors. Financial shares declined with yields falling, even after Citigroup Inc. and Bank of America Corp. posted better-than-forecast trading revenue. The Dow Jones Industrial Average and the Nasdaq 100 indexes also reached all-time peaks.

“The consumer is ready to go out and spend, after nearly a year of lockdowns from Covid-19,” said Vanessa Martinez, managing director and partner at The Lerner Group, a Chicago-based wealth management firm. “There is plenty of pent-up demand in the economy.”

The ruble slid as the Biden administration imposed new sanctions on some Russian debt, individuals and entities in retaliation for alleged misconduct related to the SolarWinds hack and the U.S. election. Traders suggested international concerns may have helped fuel the rally in Treasuries, with many investors caught positioned for higher yields.

“This continues to be one of the more confusing dynamics in markets at least right now,” said Michael Arone, chief investment strategist for the U.S. SPDR exchange-traded fund business at State Street Global Advisors. “I think part of it is that you saw the 10-year make a very rapid move over a very short period of time, so this could be a pause before it starts to move higher again.”

Expectations of a strong economic recovery, combined with optimism over monetary and fiscal stimulus, have pushed equities to record levels this week as company reporting continues. Still, investors are closely monitoring developments on the vaccine rollout, while also keeping an eye on the threat from rising inflation.

“We are probably entering the last stage of the pricing of the growth acceleration, and we see encouraging signs suggesting the ‘reflationary’ environment can continue and be supportive for risky assets in the near term,” Goldman Sachs Group Inc. strategists led by Alessio Rizzi wrote in a note. “Across assets we continue to prefer equity over credit, and favor a pro-cyclical stance within equity.”

Elsewhere, Bitcoin gained and Coinbase Global Inc. fell even following news that three funds at Cathie Wood’s Ark Investment Management bought shares at Wednesday’s debut of the largest digital asset exchange. Oil edged higher in the wake of Wednesday’s surge.

Some key events to watch this week:

• China economic growth, industrial production and retail sales figures are on Friday.

These are some of the main moves in financial markets:

Stocks

• The S&P 500 Index rose 1.1% to a record high as of 4:02 p.m. New York time
• The NASDAQ Composite Index rose 1.3%, more than any closing gain since April 5
• The Dow Jones Industrial Average rose 0.9% to a record high
• The MSCI World Index rose 0.9% to a record high

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%, falling for the fourth straight day, the longest losing streak since April 6
• The euro was unchanged at $1.20
• The British pound climbed 0.1%, rising for the fourth straight day, the longest winning streak since Feb. 24
• The Japanese yen climbed 0.2%, rising for the fourth straight day, the longest winning streak since Feb. 22

Bonds

• The yield on 10-year Treasuries declined 8.1 basis points, more than any closing loss since Feb. 26
• Germany’s 10-year yield declined 3.2 basis points, more than any closing loss since April 1
• Britain’s 10-year yield declined 6.7 basis points, more than any closing loss since March 2

Commodities

• West Texas Intermediate crude rose 0.3%, climbing for the fourth straight day, the longest winning streak since Feb. 25
• Gold futures rose 1.7%, the most since March 30

— With assistance by Vildana Hajric