Wall Street stocks ended the week volatile at a record high
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U.S. stocks ended Friday at a new high, reversing strong losses earlier in the week, as fears over the Delta variant of coronavirus were calmed by strong corporate gains and a continued support from to the central bank for the financial markets.
The S&P 500 climbed 1 percent, raising its weekly index to 2 percent and its year-over-year advance of 17 percent. The technology-focused Nasdaq Composite rose just over 1 percent, giving the index its strongest weekly advance since April.
The Stoxx Europe 600 index, which had its worst session of the year on Monday with a drop of 2.3 percent, gained 1.1 percent on Friday and was up 1.5 percent from per week.
The dominance of the highly transmissible variant of the Delta virus has helped raise fears that global economic growth may slow. Such concerns, however, have been overshadowed by optimistic guidance from much of corporate America and expectations that central banks are ready to intervene if growth cools.
“There has been a very miniature version of the spring of 2020,” said Trevor Greetham, head of multi-asset investment at Royal London, referring to last year’s global stock markets that have been invested after central banks pledged trillions of dollars in monetary support value.
“Markets now know if there is a period of [economic] weakness, there will be an additional stimulus as needed. ”
U.S. President Joe Biden will renew Jay Powell as chairman of the Federal Reserve, suggesting he will not break with current central bank policies, while the European Central Bank on Thursday reaffirmed its commitment to keep euro area interest rates to a minimum.
Of the companies listed S&P 500 that have published results for the second quarter of 2021 so far, 88 percent have beat analysts ’forecasts, according to FactSet data.
Investors had already written off in a blockbuster earnings season while corporate profits were flattered by the underlying effects of a historic recession last year.
“But the gains are important,” said Philip Toews, president of business manager Toews Corporation. He noted that the fact that profits eclipsed expectations was critical to maintaining equity, which are valued at a high level based on several metrics compared to historical averages.
“When markets are overvalued as of now, anything that supports the event is considered significant,” he said. “We’re in a bubble, we’re in the top quintile.” [historic] assessments, then it’s about understanding ways to stay engaged in the market. ”
The cyclically-adjusted price-to-profit ratio of the S&P 500, a carefully crafted valuation measure developed by economist Robert Shiller, is around its highest level since the end of the dotcom boom of the 1990s, according to Barclays Indices .
But some investors have warned that the shift back to growth stocks has undermined anxiety over the slowdown in economic expansion.
Small-cap stocks, seen as more sensitive to changes in U.S. economic growth, dragged the broader market Friday with the Russell 2000 up 0.5 percent. The Dow Jones High Average, full of economic bells and whistles including railroads and maritime groups, is also down on the last day of the trading week, up 0.7 percent.
“Before the end of March, we saw that investors’ concerns about the deceleration continued to enter the market, ”said Patrick Palfrey, capital strategist at Credit Suisse. “It is challenging investors to reassess the long-term potential of these value-oriented pro-cyclical investments.”
The yield on the 10-year U.S. Treasury note was little changed Friday at 1.28 percent, remaining close to its lowest level since February. Bond yields move inversely to prices.
The dollar index, which measures the green dollar against major currencies, is up 0.1 percent. Brent crude, the international crude oil benchmark, rose 0.4 percent to settle at $ 74.10 a barrel.
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