The Dow and S&P 500 index finished at another record on Friday, with all three major equity benchmarks booking weekly gains, as investors gravitated toward shares of companies set to benefit from a stronger economic recovery this year.
Technology stocks fared less well, however, as long-term government bond yields rose to a one-year high.
What are major benchmarks doing?
- The Dow Jones Industrial Average DJIA, +0.90% gained 293.05 points, or 0.9%, to finish at 32,778.64, marking another all-time high.
- The S&P 500 index SPX, +0.10% rose 4 points, or 0.1%, to end at 3,943.34, booking a closing record.
- The Nasdaq Composite Index COMP, -0.59% fell 78.81 points, or 0.6%, to finish at 13,319.86.
For the week, the Dow gained 4.1%, the S&P 500 rose 2.6%, while the Nasdaq Composite advanced 3.1%.
What’s driving the market?
A rebound by technology shares that led stocks on Thursday gave way to some weakness in the Nasdaq Composite on Friday, amid a renewed rise in Treasury yields, with the rate on the 10-year note TMUBMUSD10Y, 1.626% jumping nearly 10 basis points to finish at around 1.63%.
Need to Know: Here’s how far the Nasdaq could fall if bond yields reach 2%
Yet the rise in bond yields didn’t cap gains for broader equity markets on Friday, instead driving a rotation away from companies that benefited from work-from-home arrangements during the pandemic, such as technology and internet stocks, into stocks that have been hit by the lockdowns during the pandemic.
“Investors have gravitated towards cyclical and value stocks that could do well as the economy recovers, and many of those stocks can be found in the Dow,” wrote Lindsey Bell, chief investment strategist for Ally Invest.
Indeed, investors are busily raising their economic growth forecasts this year in anticipation of fiscal support. Analysts surveyed by MarketWatch now anticipate the U.S. economy to grow by a blistering 6% in 2021.
President Joe Biden on Thursday signed a $1.9 trillion COVID-19 relief package into law. In a televised speech Thursday night, Biden pledged to make all adults eligible for vaccines by May 1. So far about 29% of the U.S. population has received at least one dose of vaccine, according to the CDC.
“I remain confident that the downside risk is mild relative to recent gains,” wrote Colin Moore, global chief investment officer, at Columbia Threadneedle Investments, in a research report. “The reality of global economic recovery in the second half of 2021 will most likely restore balance to the relationship between investor expectations and outcomes,” the CIO wrote.
Analysts said technology shares may also have come under pressure after China’s market regulator on Friday said it had imposed fines on some of the country’s largest tech firms.
Also, Bloomberg reported that the Biden administration had informed some suppliers of China’s Huawei Technologies Co. that it would set tighter conditions on previously approved export licenses, barring items for use in, or with, 5G devices.
Meanwhile, a U.S. inflation at the wholesale level for February, the producer-price index came in with a 0.5% rise, as expected. Excluding volatile food and energy, prices rose 0.2% for the month, compared against expectations for a rise of 0.3%, according to Econoday. On an annualized basis, the core PPI index was up 2.2% over the past year versus 2% in the prior month.
The University of Michigan’s preliminary consumer sentiment index for March rose to 83, beating expectations of a rise to 78.9 and a February reading of 76.8. The market didn’t appear to react significantly to the data.
Which companies are in focus?
- Shares of Ulta Beauty Inc. ULTA, -8.45% fell 8.5% after it reported lower fourth-quarter sales and profit, year over year, late Thursday. It also announced that Chief Executive Mary Dillon will be replaced by company President David Kimbell.
- GoodRx Holdings Inc. GDRX, -10.42% shares fell 10.4% after the healthcare company reported adjusted earnings that were above Wall Street expectations but guided for lower first-quarter sales.
- DocuSign DOCU, -6.61% were under pressure, down 6.6%, even after the electronic authentication company issued a better-than-expected quarterly outlook in its most recent quarterly report.
- Novavax NVAX, +8.07% says its COVID vaccine is effective against variants of the deadly virus. Its stock surged 8.1%.
- Shares of GameStop Corp. GME, +1.73% rallied 3.2% Friday, following a 1.9% drop in the previous session, on an otherwise mixed session for other meme stocks.
- Boeing Co. BA, +6.82% has received an order from a private investment firm 777 Partners to buy 24 737 MAX airplanes with an option to purchase a further 60, according to a Reuters report. Shares of the Dow component gained 6.8%.
- Shares of AMC Entertainment Inc. AMC, +8.56% shot up 9.1% Friday, putting it on track for a weekly gain of 36.0%, and has now run up 95.9% amid a four-week win streak.
- Shares of Charles Schwab Corp. SCHW rose 1.9%, after the discount brokerage released its monthly activity update, which showed new brokerage accounts in February more than tripling from the year-ago increase.
How are other assets faring?
- The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, rose 0.2%.
- Oil futures finished lower, with the U.S. benchmark CL.1 down 0.6% to $65.61 a barrel, booking a weekly drop of 0.7%. Gold futures GC00 fell $2.80, or 0.2%, to settle at $1,719.80 an ounce, on Comex.
- The pan-European Stoxx 600 Europe index SXXP finished 0.3% lower and London’s FTSE 100 UKX rose 0.4%.
- In Asia, Hong Kong’s Hang Seng Index HSI skidded down 2.2%, the Shanghai Composite Index SHCOMP, rose 0.5%, China’s CSI 300 000300, +0.35% rose by 0.4%, while Japan’s Nikkei 225 index NIK rose1.7%.
- Bitcoin prices BTCUSD, -1.40% was down 1% to $56,674, according to CoinDesk.
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