Company / Analytics

Week 12 in Brief

U.S. stocks closed sharply higher on Friday, booking weekly gains to wrap up a turbulent week, even as investors remained concerned about rising bond yields and global economic recovery.

How did the major indices perform?

• On Friday, the Dow Jones Industrial Average closed about 452 points, or 1.4%, higher at roughly 33,072, retaking a psychologically significant level at 33,000.
• The S&P 500 jumped 65.02 points, or 1.7%, to settle at 3,974.54.
• The Nasdaq Composite added 161.05 points, or 1.2%, to finish at 13,138.72, after touching an intraday low at 12,878.72.
• On Thursday, the Dow closed 199.42 points, or 0.6%, higher at 32,619.48, the S&P rose 20.38 points to end at 3,909.52, a rise of 0.5%, while the Nasdaq closed at 12,977.68, up 15.79 points for a gain of 0.1%.
• For the week, the Dow notched a 1.4% increase, the S&P 500 added 1.6%, and the Nasdaq fell 0.6%.
• For the week, the Dow notched a 1.4% increase, the S&P 500 added 1.6%, and the Nasdaq fell 0.6%.

What drove the market?

• Rising Bond Yields. Concerns about rising bond yields had caused headwinds for stocks in recent weeks but evidence of an improving economy helped to calm investors’ nerves. The 10-year Treasury note also yielded 1.68% on Friday but finishing below its close last week at 1.729%.
• Stocks have struggled for direction in recent weeks and have been prone to intraday turbulence. Analysts have largely attributed this latest bout of volatility to month-end and quarter-end rebalancing by large pension funds. But as the bull market in bonds comes into question, big investors who adhere to traditional stocks-to-bonds portfolio diversification theories of 60% to 40% are feeling compelled to buy more fixed-income assets as yields rise and bond prices fall.
• Economic data. Markets seemed to shake off weak reports on consumer spending and income, with February data showing the biggest decline in spending in 10 months due to harsh winter weather and a temporary respite in government stimulus payments. Economists are optimistic the new round of stimulus pushed through by Biden will likely lead to a big-spending jump. Personal income declined 7.1% in February, compared with an expected drop of 7%. The final reading of consumer sentiment in March rose to 84.9 points from 83 earlier in the month, according to a survey produced by the University of Michigan.
• Meanwhile, Americans remained upbeat about the economy and their financial well-being since the start of the pandemic, a new survey shows, thanks to declining coronavirus cases and more stimulus payments from Washington. However, a rise in coronavirus cases that has forestalled the business reopening plans for large parts of Europe also has been credited with creating headwinds for bullish investors.

Which stocks were in focus Friday?

• The S&P 500’s energy sector gained 2% for the week, while the materials sector was up 1.9%, representing the top-performing sectors on the week among the broad-market index’s 11. Communication services, off 1.6%, and utilities were the worst performers.
• In stocks, WeWork is set to go public in a $9 billion merger with a blank-check company. The office-sharing company will merge with BowX Acquisition Corp.
• AMC Entertainment Holdings shares fell 6.4%, closing at $10.24 on Friday after a strong 21% rise on Thursday for the movie chain.
• GameStop lost 1.5%% after a 53% jump on Thursday. Shares closed at $181.
• Shares of Zoom Video Communications Inc. closed modestly higher even as a technical warning appeared in the company’s stock chart.

How did the European markets perform?

• European stocks ended the week close to all-time highs, with miners prominent as investors shrugged off worries about the third wave of coronavirus infections and focused on prospects of a solid global economic recovery.
• The pan-European STOXX 600 index rose 0.8% on Friday, registering its fourth straight weekly rise, boosted by mining and oil & gas stocks. Defensive sectors, including healthcare and utilities, were slightly down.
• Trading earlier in the week was subdued by worries about new lockdowns and a slow pace of vaccination in the eurozone, but optimism about a stimulus-driven recovery in the United States brightened the outlook for global growth.
• Morgan Stanley said global equities should slow down but Europe was poised to outperform relative to other markets, as it expects the region’s relative economic momentum to improve over the next 3-6 months.

How did Asian markets perform?

Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 1.14%, while the Nikkei 225 led the Hang Seng lower. They fell 2.07% and 0.27% respectively.

Commodities and other assets

• Oil futures rose on Friday on concerns that the Suez Canal mishap may block shipping lanes and squeeze supply. The U.S. benchmark WTI added $2.41, or 4.1%, to settle at $60.97 a barrel on the New York Mercantile Exchange while Brent was at $64.45, up 4.04% on the day.
• Gold futures closed higher but booked a weekly loss. The April contract added $7.20, or 0.4%, to settle at $1,732.30 an ounce.

Currencies

• The dollar was roughly flat against major currencies on Friday, but still near four-month peaks, on continued optimism about the U.S. economy, and came close to surpassing a 10-month high against the Japanese yen.
• The USD index, which measures the greenback against a basket of six major currencies, stood at 92.7200, on track to close out the week with a gain of about 0.7%. The dollar rose to a nine-month high against the Japanese yen of 109.80 yen, roughly the highest since June.
• The euro managed to claw from Thursday’s four-month low, though the common currency is still bruised by doubts over the slow pace of vaccinations and rising infections.
• Meanwhile, bitcoin gained more than 4%, helping recover some of its pullbacks from a record high of almost $62,000 touched earlier this month. It was last up 4.50% at $53,654.

Next Week

• Investors will continue exhibiting optimism around the Covid vaccine rollout and the ‘reopening trade’ associated with it.
• Watch out for our Monday Weekly Market Outlook that provides insights on what’s coming up that week.