Stocks hit record as small caps jump; dollar gains
Stocks extended their rally into a fourth day as traders parsed through a flurry of corporate results amid signs the U.S. labor market may be gradually improving. The dollar rose.
The S&P 500 climbed to a record, led by banks and tech shares, as the Russell 2000 Index jumped 2%. EBay Inc. and PayPal Holdings Inc. surged on upbeat forecasts, while Netflix Inc. gained after raising the price of its service in Japan. Meanwhile, GameStop Corp. plunged as day traders flocked to other stocks like drug developers, and Nordstrom Inc. slid after announcing plans to win back customers -- a sign that Wall Street may have expected a more comprehensive overhaul. A widely watched segment of the Treasury yield curve steepened to levels last seen in 2015.
The bull market in U.S. stocks remains on "solid footing" as the rebound in activity and corporate profits alongside an accommodative Federal Reserve create a supportive environment for equities, according to UBS Group AG. A report Thursday showed jobless claims fell to the lowest since November, and the next major update on the economy comes on Friday -- with analysts forecasting the labor market added about 100,000 jobs in January after a 140,000 drop in December. Selected high-frequency data, such as weekly consumer-confidence readings, also point to some strengthening.
"We certainly seem to have shifted our focus back to fundamentals," said Arthur Hogan, chief market strategist at National Securities Corp. "The virus news is getting incrementally better at the very same time that the earnings season and economic data seem to be showing some improvement. Markets are actually focusing on what we're supposed to be focused on and less concerned about the machinations of getting fiscal policy out and what's going on in Reddit-land."
The Reddit-fueled rumble in the U.S. stock market may have heightened fears of another burst of volatility, according to options data tracked by Bloomberg. Over the last two weeks, the Cboe Volatility Index's futures curve has shifted markedly higher, showing a pronounced peak in April before a gradual decline. The move suggests investors expect more volatility in the short-term amid concerns about extended valuations, the pace of the vaccine rollout and the impact of retail-trading activity.
These are some of the main moves in markets:
- The S&P 500 increased 1.1% as of 4 p.m. New York time.
- The Stoxx Europe 600 Index rose 0.6%.
- The MSCI Asia Pacific Index decreased 0.7%.
- The Bloomberg Dollar Spot Index rose 0.4%.
- The euro dipped 0.6% to $1.1965.
- The Japanese yen depreciated 0.5% to 105.55 per dollar.
- The yield on 10-year Treasurys fell less than one basis point to 1.14%.
- Germany's 10-year yield climbed one basis point to -0.45%.
- Britain's 10-year yield jumped seven basis points to 0.44%.
- West Texas Intermediate crude rose 1% to $56.26 a barrel.
- Gold lost 2.1% to $1,794.80 an ounce.
- Silver fell 2% to $26.35 per ounce.