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U.S. Stocks Jump, Send Nasdaq Higher for the Year: Markets Wrap

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, Feb. 9, 2018. The convulsions rocking U.S. equity markets continued Friday, with major indexes headed for the worst week in almost seven years after falling back from early gains. Treasury declines eased as investors sought havens from gold to the yen.

(bloomberg)

(Bloomberg) -- U.S. stocks surged, with financial markets showing signs of recovery after the worst week in two years for American equities. 

The 10-year yield fell back from the four-year high hit earlier Monday as the dollar slipped. The Nasdaq Composite Index turned positive for 2018, with the Dow Jones Industrial Average and the S&P 500 now down less than 1 percent since the end of December. Stocks and bonds have been in a tug-of-war since a blowout jobs report early this month sent Treasury yields spiking, raising the specter of higher interest rates to come. 

The Cboe Volatility Index fell as the S&P posted its biggest two-day advance in 18 months, but traders were still on edge following the tumultuous move in equities last week that wiped $2 trillion from U.S. stocks. Investors are awaiting U.S. consumer-price data due Wednesday with some trepidation, given that pressure on equities has been emanating from the Treasury market and the outlook for inflation.

“You just had a major reversal and investors are just taking a deep breath,” said Mike Bailey, the director of research at FBB Capital Partners in Bethesda, Maryland. “People said, ‘OK, the 10 percent correction is over, let’s take a look at the bright side.”’

The S&P 500 retook its 100-day moving average, a technical indicator that it crashed through last week. Morgan Stanley chief U.S. equity strategist Michael Wilson reversed his week-old cautious call, joining peers at Goldman Sachs Group Inc. and JPMorgan Chase & Co. who have told clients to buy the dip.

European and Asian equities also rose Monday, while the dollar’s slide supported commodities, with metals rallying and crude oil slightly higher after a six-day selloff. 

The won outperformed major currencies after Vice President Mike Pence told the Washington Post the U.S. is ready to engage in talks about North Korea’s nuclear program, signaling a shift in policy. South Africa’s rand strengthened on speculation President Jacob Zuma is poised to leave office.

Terminal users can read more in our markets blog.

Here are some important things to watch out for this week:

  • Chinese New Year celebrations for the Year of the Dog begin in China and follow across much of Asia, including Hong Kong, Taiwan, Singapore, Malaysia and Indonesia. Chinese mainland markets are closed Feb. 15-21.
  • Zuma’s fate is set to be sealed on Monday when the top leadership of the ruling African National Congress meets to conclude the transition to a new administration.
  • The U.S. consumer-price index, due Wednesday, probably increased at a moderate pace in January, economists project. Retail sales in the U.S., also out Wednesday, probably increased for a fifth straight month.
  • Japan is expected to extend the longest stretch of economic growth since the mid-1990s when it reports fourth-quarter gross domestic product on Wednesday.
  • Earnings season continues in full swing with reports from Bunge, TripAdvisor, SunPower, Con Edison, Bombardier, Michelin, PepsiCo, MetLife, Cisco, Japan Post Bank, Credit Suisse, Nestle, Airbus, Allianz, Telstra, Coca-Cola, Deere, Eni, Credit Agricole and Campbell Soup.

These are the main moves in markets:

Stocks

  • The S&P 500 Index rose 1.4 percent at the close of trading in New York
  • The Stoxx Europe 600 Index climbed 1.2 percent.
  • The MSCI All-Country World Index added 1.2 percent, the most since April.
  • The U.K.’s FTSE 100 Index rose 1.2 percent.

Currencies

  • The Bloomberg Dollar Spot Index dipped 0.3 percent.
  • The euro rose 0.3 percent to $1.229.
  • The British pound was little changed at $1.3834.
  • South Africa’s rand climbed 0.5 percent to 11.93 per dollar.

Bonds

  • The yield on 10-year Treasuries was little changed at 2.85 percent.
  • Germany’s 10-year yield rose one basis point to 0.75 percent.
  • Britain’s 10-year yield rose three basis points to 1.6 percent.

Commodities

  • West Texas Intermediate crude added 0.2 percent to $59.33 a barrel, the first advance in more than a week.
  • Gold rose 0.5 percent to $1,322.74 an ounce for the largest advance in two weeks.
  • Copper futures climbed 1.7 percent for the first advance in five days.

--With assistance from Elena Popina Ruth Carson Andreea Papuc Eddie van der Walt Todd White Christopher Anstey and Lu Wang

To contact the reporters on this story: Kailey Leinz in New York at kleinz1@bloomberg.net, Sarah Ponczek in New York at sponczek2@bloomberg.net.

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Brendan Walsh

©2018 Bloomberg L.P.

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