Stocks stage late rally to set another record high
U.S. stocks turned higher in the last hour of trading to close at another record, while the rally in bond markets lost steam as investors prepared for a key Federal Reserve meeting later in the week. Oil touched the highest in more than two years.
The information technology and communication services sectors pushed the S&P 500 to an all-time high even as three stocks fell for every one that rose. Financials dropped as JPMorgan Chase Chief Executive Officer Jamie Dimon suggested Wall Street's pandemic-era trading boom could be drawing to a close. The Treasury 10-year yield rose to 1.50% after hitting three-month lows on Thursday amid the biggest weekly slide since December.
Investors are on the lookout for signals from the Fed about a timetable for scaling back emergency monetary stimulus. Expectations are that the central bank will reaffirm the pace of bond purchases this week, even if it delivers projections for interest-rate liftoff in 2023, according to economists surveyed by Bloomberg. The decision is due Wednesday.
"We're in a tug-of-war between the understanding that we're having great economic growth and great earnings growth juxtaposed with the fact that we need to get our head wrapped around what inflation looks like and what it will mean both to profit margins and to the Fed," said Art Hogan, chief strategist at National Securities.
With anxiety about an imminent taper fading, bond yields have fallen to the bottom of recent trading ranges, providing a green light for risk-on sentiment that may last until at least August, according to Mizuho International Plc strategists.
"The overarching theme should be of an environment for investors to put cash to work," Mizuho's head of multi-asset strategy Peter Chatwell and colleagues wrote in a note to clients. "With this backdrop most asset classes should be able to at least hold ground, if not rally. We doubt any major change in Fed rhetoric will materialize before" the Jackson Hole symposium in August.
Oil was little changed after three weekly gains on optimism that economic reopenings will boost summer demand in the U.S. and Europe. Hedge funds boosted net-bullish positions to a nearly three-year high, according to the latest Commodity Futures Trading Commission data.
French and German government bond peers also reversed course with yields turning higher. European equities closed mostly higher.
Bitcoin continued to whipsaw investors, climbing above $40,000 after Paul Tudor Jones reiterated his support, only to erase most of its gains later. It had rose over the weekend after Elon Musk said Tesla would resume transactions with the cryptocurrency when mining it is done with more clean energy. Barry Silbert said later that the majority of cryptocurrencies are overpriced. Not just the majority, but 99% of them. Silbert is the founder and chief executive officer of Digital Currency Group, the crypto powerhouse behind the Grayscale Bitcoin Trust among other things.
The dollar was steady in the wake of a Group-of-Seven leadership meeting that emphasized unity.
These are some of the main moves in markets:
- The S&P 500 rose 0.2% to a record high as of 4:03 p.m. EDT
- The Nasdaq 100 rose 0.9% to a record high
- The Dow Jones industrial average fell 0.2% to the lowest since May 26
- The MSCI World index rose 0.2% to a record high
- The Bloomberg Dollar Spot Index rose 0.1% to the highest since June 3
- The euro was little changed at $1.2121
- The British pound was unchanged at $1.4107
- The Japanese yen slipped 0.4%, more than any closing loss since June 3
- The yield on 10-year Treasurys advanced four basis points, more than any closing gain since May 12
- Germany's 10-year yield advanced two basis points, more than any closing gain since May 27
- Britain's 10-year yield advanced three basis points, more than any closing gain since June 3
- West Texas Intermediate crude rose 0.2% to $71.08 a barrel
- Gold futures fell 0.6% to $1,867.60 an ounce