Tech shares rally to lift S&P 500 up 1 per cent, Treasury yields fall

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Stock indexes rose around the globe on Thursday, with the S&P 500 climbing more than 1 per cent led by sharp gains in technology shares, while US Treasury yields fell after a weaker-than-expected US business activity reading.

The Philadelphia Federal Reserve Bank said its business activity index fell to 31.5 from 50.2 in April, its highest pace in nearly half a century. The reading was shy of economists’ expectations of 43.0, a Reuters poll found, and cast doubt on how fast the economy can continue to heat up.

Cryptocurrencies bounced back from their recent sharp drop, but were well off the day’s highs by afternoon New York time, as US regulators signalled greater oversight for the sector.

Bitcoin was most recently up about 8 per cent at $40,035 after some of its prominent backers reiterated their support for the digital currency, having plummeted to 54 per cent below its record high, hit just over a month ago.

Smaller rival ether gained about 14 per cent to $2,782. On Wednesday, it fell 22.8 per cent, its biggest daily fall since March 2020.

Investors are also still digesting minutes from the Fed’s meeting last month, which showed a number of officials thought that if the recovery holds up it might be appropriate to “begin discussing a plan for adjusting the pace of asset purchases.”

Other data Friday showed the number of Americans filing new claims for unemployment benefits dropped further below 500,000 last week, but jobless rolls swelled in early May, which could temper expectations for an acceleration in employment growth this month.

The S&P 500 technology index ended up 1.9 per cent.

The Dow Jones Industrial Average rose 188.11 points,or 0.55 per cent, to 34,084.15, the S&P 500 gained 43.44 points,or 1.06 per cent, to 4,159.12 and the Nasdaq Composite added236.00 points, or 1.77 per cent, to 13,535.74.

The pan-European STOXX 600 index rose 1.27 per cent and MSCI’s gauge of stocks across the globe gained 0.95 per cent.

The yield on benchmark 10-year Treasury notes fell 4.3 basis points to 1.640 per cent.

Market expectations of a further rise in inflation would need evidence of the economy moving past full employment very, very rapidly, said Steven Ricchiuto, US chief economist at Mizuho Securities USA LLC.

“We’ve probably already reached the peak level of economic activity, and that probably happened in March and April,” Ricchiuto added.

In the foreign exchange market, the dollar lost ground and was hovering near multi-month lows.

Late in New York, the dollar index fell 0.491 per cent, with the euro down 0.01 per cent to $1.2225.

The bounces in cryptocurrencies came after crypto backers such as Ark Invest’s Cathie Wood and Tesla’s Elon Musk indicated their support on Wednesday.

Concerns over tighter regulation in China and unease over the extent of leveraged positions in the cryptocurrency world had caused this week’s big sell-off.

Outages at several major trading platforms during the maelstrom, which also set ether tumbling nearly 50 per cent, did little to inspire confidence.

SPACs – special purpose vehicles set up and listed to buy up other firms – experienced huge growth last year, as did the ARK innovation fund that focuses on tech companies.

Oil prices dropped more than 2 per cent after diplomats said progress was made toward a deal to lift US sanctions on Iran. Brent crude fell $1.55, or 2.3 per cent, to settle at $65.11 a barrel. West Texas Intermediate crude ended $1.31, or 2.1 per cent, lower at $62.05 a barrel. Both contracts fell around 3 per cent in the previous session.

Spot gold was nearly flat.