Wall Street saw another day of stunning reversals, with stocks pushing higher and higher after a Treasury selloff sputtered. The yen jumped as Japan intervened again to prop up the currency.
(Bloomberg) — Wall Street saw another day of stunning reversals, with stocks pushing higher and higher after a Treasury selloff sputtered.
The yen jumped as Japan intervened again to prop up the currency.
The many twists and turns in the S&P 500 gave way to a 2% surge Friday that put the US equity benchmark on track for its best week since June.
It’s worth noting that some of that volatility was caused by the $2 trillion options expiration.
For a financial world that’s been driven by the global rate outlook, certainly what happens in the biggest bond market matters a lot.
Stocks pushed decidedly into the green when Treasury 10-year yields retreated from the highest since 2007.
“The story this week is all about the volatility in rates, huge volatility in Treasuries,” said Keith Lerner, chief market strategist at Truist Advisory Services.
“But I would say, overall, relative to how much interest rates have moved up, I would say the market has held in there pretty well.”
Equities also managed to climb despite the drumbeat of Federal Reserve speakers signaling monetary policy will remain tight to fight scorching inflation.
Fed Bank of San Francisco President Mary Daly said officials should start planning for a reduction in the size of rate increases — though it’s not yet time to “step down” from large hikes.
Her St. Louis counterpart James Bullard said the strong US labor market gives the central bank room to raise rates.
Equity funds are still seeing inflows despite deeply pessimistic sentiment, with “final capitulation” not yet here, said Bank of America Corp.
Global stock funds had inflows of $9.2 billion in the week through Oct. 19, according to a note from the bank citing EPFR Global data.
“The equity market is trying to form a bottom to get to the last leg of the bear market,” said David Donabedian, chief investment officer of CIBC Private Wealth US.
“It feels like a two-way market right now. We have a tug of war going on between the skeptics and those who think it is time to own equities.”
He noted that the Fed is not done raising rates and valuations are still not as low as he would expect to see at the bottom of a bear market.
“We are just not there yet,” Donabedian added.
Some of the main moves in markets:
Stocks
- The S&P 500 rose 2.1% as of 2:09 p.m.
New York time
- The Nasdaq 100 rose 2%
- The Dow Jones Industrial Average rose 2.2%
- The MSCI World index rose 1.2%
Currencies
- The Bloomberg Dollar Spot Index fell 0.6%
- The euro rose 0.5% to $0.9835
- The British pound rose 0.3% to $1.1266
- The Japanese yen rose 1.6% to 147.80 per dollar
Cryptocurrencies
- Bitcoin rose 0.9% to $19,201.32
- Ether rose 1.6% to $1,303.25
Bonds
- The yield on 10-year Treasuries was little changed at 4.22%
- Germany’s 10-year yield advanced one basis point to 2.42%
- Britain’s 10-year yield advanced 14 basis points to 4.05%
Commodities
- West Texas Intermediate crude rose 0.4% to $84.85 a barrel
- Gold futures rose 1.3% to $1,658.20 an ounce
–With assistance from Vildana Hajric and Emily Graffeo.
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