Saturday, October 31, 2020

Stocks turn higher, pare weekly drop; bonds rise

Sep 12. 2020
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By Syndication Washington Post, Bloomberg · Vildana Hajric · BUSINESS

U.S. stocks continued to swing wildly after a five-month rally came to a halt last week, with the S&P 500 turning higher in the final hour of trading.

The tech-heavy index traveled 3% from high to low Friday and was headed for the fifth loss in six days. It's down 10% from its Sept. 2 record. The rout comes after a torrid August capped a 58% rally from late March. Apple Inc. has plunged 16% from its 10-day old high, but remains only at the lowest in a month.

"You see this kind of volatility when there is a vacuum of information for investors, and we don't have good data," said Erika Karp, founder and CEO of Cornerstone Capital Group. "Markets can adapt when there is certainty, but when there is extreme uncertainty and when we're in a period of transition, you're going to get volatility."

The S&P 500 edged higher, with three stocks rising for every one that declined. The Dow Jones industrial average advanced on rallies in Nike, Dow and Caterpillar.

Tech, the scene of fervent bullish options activity, gave up early gains for a second day, as investors assessed whether the pullback had run its course. Selling picked up Friday after Bloomberg reported SoftBank Group Corp. is considering revamping a controversial strategy of using derivatives to invest in tech companies. Microsoft took a hit after a report that China doesn't favor a forced sale of TikTok's U.S. operations.

Treasurys advanced, sending the 10-year yield toward 0.67%, while the dollar remained slightly lower. The yen was flat, oil was little changed and gold slumped.

Global stocks remain on track for the first back-to-back weekly declines since March after a rally that added $7 trillion to U.S. equity values. The pandemic is continuing to upend the global economy, with U.S. data showing cracks in recent labor-market strength and virus cases continuing to climb globally.

"When you see these short-term, sudden moves after a run-up like we've had, it doesn't mean you avoid the sector, but you have to be prepared that it's the price of admission of being there," said Charles Day, a managing director and private wealth adviser at UBS Global Wealth Management. "Investors should stay invested, we're still positive on equities."

In Europe, traders are closely watching comments from European Central Bank officials after President Christine Lagarde spurred a rally in the euro on Thursday when she delivered relatively mild comments on the currency's surge. Chief Economist Philip Lane set a tougher tone on Friday, signaling more monetary stimulus may be needed. Meanwhile, the British pound headed for its biggest weekly drop since March as Brexit talks frayed.

In other markets, crude oil hovered around $37 a barrel in New York and gold dipped. The MSCI Emerging Markets Index rose, ending a seven-day losing streak.

These are the main moves in markets:

Stocks

The S&P 500 rose 0.1% as of 4 p.m. EDT.

The Nasdaq Composite Index lost 0.6%.

The Nasdaq 100 Index dropped 0.6%.

Currencies

The Bloomberg Dollar Spot Index fell 0.2%.

The Japanese yen was little changed at 106.09 per dollar.

The euro increased 0.2% to $1.1842.

Bonds

The yield on two-year Treasurys decreased one basis point to 0.13%, the lowest in a week.

The yield on 10-year Treasurys dipped one basis point to 0.67%, the lowest in a week.

The yield on 30-year Treasurys fell one basis point to 1.41%, the lowest in a week.

Commodities

West Texas Intermediate crude rose 0.6% to $37.52 a barrel.

Gold futures lost 0.7% to $1,950.60 an ounce.

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