The growing outlook for turbo-charged economic growth in the United States has rearranged the winners and losers of the stock market over the past two months.
Investors regained the riskiest assets in the market on Tuesday as buyers of bottoms propelled the Nasdaq 100 to its biggest rally since April and sent Bitcoin back to a record high. Treasuries added to the gains after a ticket auction.
Home winners surged after being left for dead as vaccinations resumed and Democrats decided to pump $ 1.9 trillion into the economy. T-bill yields retreated from recent highs over fears that a possible overshooting of the economy could lead to inflation. For at least a day, the growth-to-value share rotation was violently reversed. Here are some of the main moves:
- Tesla Inc. has jumped nearly 20% to its best day in a year.
- Peloton Interactive Inc., DocuSign Inc. and Pinduoduo Inc. rallied over 11%.
- Financial firms and power producers, recent winners, were the only two S&P 500 groups to pull out.
- Spot gold jumped more than 2% after falling to its lowest since April.
- The 10-year yield fell below 1.55%.
- Bitcoin has exceeded $ 54,000.
- Oil and copper fell after the recent rallies.
The growing prospects of turbo-charged economic growth have rearranged the market’s winners and losers over the past two months, as passage of the stimulus bill became more likely and daily vaccinations increased. On Tuesday, dip buyers targeted recently abandoned areas as overpriced. Reversal has been a theme that has been playing out for years, every retreat is bought, and it’s been extreme lately. The S&P 500 has not seen a 5% decline since November.
Falling Treasury bond yields after the recent violent surge allowed risk-takers to return to growth after leaving the group as stretched valuations began to scare with rising rates.
“Let’s not forget that less than a year ago, traders interpreted one of the biggest negative macroeconomic events in market history as a buying opportunity, so there is hardly any There is reason to believe otherwise given all the positive signals around us today, ”said Chris Larkin, Managing Director of Trading and Investing Products at E * Trade Financial. “Corrections create natural inflection points for traders. It is not surprising to see the Nasdaq rise today, and the fundamentals support a continued uptrend.
The first of several Treasury sales in the days to come went without disrupting the markets. Sales will test the appetite for the safest debt after poor auctions last month sent shockwaves through global markets and short bets hit a record high. Benchmark 10-year yields broke above the 1.6% level to trade at a one-year high last week.
Here are some key events to watch out for:
- EIA crude oil inventory report due on Wednesday
- The US Consumer Price Index for February will provide the latest snapshot of price pressures on Wednesday.
- The US government is auctioning 3, 10 and 30-year Treasuries this week.
- The European Central Bank is holding its monetary policy meeting and President Christine Lagarde is due to brief on Thursday.
- The S&P 500 Index was up 1.9% at 3:30 p.m. New York time.
- The Nasdaq 100 added 4.6%.
- The Stoxx Europe 600 index rose 0.8%.
- The MSCI Asia Pacific index rose 0.8%.
- The MSCI Emerging Markets Index rose 0.9%.
- The Bloomberg Dollar Spot Index fell 0.6%.
- The euro gained 0.5% to $ 1.1902.
- The British pound climbed 0.5% to $ 1.3897.
- The Japanese yen rose 0.4% to 108.46 per dollar.
- The yield on 10-year Treasuries fell five basis points to 1.54%.
- Germany’s 10-year yield fell three basis points to -0.30%.
- West Texas Intermediate crude plunged 1.6% to $ 64.02 a barrel.
- Gold futures strengthened 2.2% to $ 1,715.30 an ounce.