Stocks Extend Gain as ‘Not That Many Bears Left’: Markets Wrap

(Bloomberg) -- U.S. equities were higher on a quiet day of trading ahead of the Federal Reserve’s Jackson Hole symposium later this week. 

The S&P 500 and Nasdaq 100 gained on Wednesday, with both indexes topping record highs. The financial and energy sectors led the gains as Treasury yields and crude oil advanced. Meanwhile, stocks in Europe drifted while a gauge of Chinese tech names struggled to extend a rally. 

“There are not that many bears left,” Irene Tunkel, chief U.S. equity strategist at BCA Research, said by phone. Pullbacks like last week’s are becoming “shallower and shallower” as more people buy the dip, she said. “There is very, very strong buy-the-dip mentality.”

Company earnings, expanding vaccinations and support from monetary policy have helped repair sentiment in the face of climbing delta variant cases. However, the pace of the Fed’s plans to begin tapering its asset purchase program remains a key overhang, which traders seek to get more clarity on when Fed Chairman Jerome Powell speaks virtually on Friday.

Fiona Cincotta, a senior financial markets analyst at City Index, said investors have been “flip flopping” over whether the Fed will make a taper announcement, with current consensus expecting the Fed to delay an announcement until later in the autumn, given the rising Covid cases.

Investors are hoping to gain more insight into the Fed’s thinking on monetary stimulus amid a takeoff in inflation but still-mixed economic reports. The latest data Wednesday showed orders placed with U.S. factories for business equipment unexpectedly stalled in July, marking a pause in a months-long buildup in capital investment.

“Visibility into getting enough product to satisfy demand is a challenge. Managing one’s own rising cost pressures and labor shortages are another,” said Peter Boockvar, Bleakley Advisory Group chief investment officer, noting the recovery’s uncertainty. “On the other hand, for those thinking longer term, capital investments must take place.”

WTI crude oil gained, adding to Tuesday’s best two-day rally since November 2020. Gold fell below $1,800. The dollar was little changed.

Here are some events to watch this week:

• Bank of Korea policy decision; briefing by Governor Lee Ju-yeol Thursday
• Fed officials attend the Jackson Hole Economic Policy Symposium from Thursday through Saturday
• U.S. GDP, initial jobless claims Thursday
• July U.S. personal income and spending data Friday. Investors will scrutinize the personal consumption expenditures price index, an inflation measure closely watched by the Fed.

For more market analysis read our MLIV blog.

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.2% as of 4 p.m. New York time
• The Nasdaq 100 was little changed
• The Dow Jones Industrial Average rose 0.1%
• The MSCI World index rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.1% to $1.1771
• The British pound rose 0.2% to $1.3760
• The Japanese yen fell 0.3% to 109.99 per dollar

Bonds

• The yield on 10-year Treasuries advanced five basis points to 1.34%
• Germany’s 10-year yield advanced six basis points to -0.42%
• Britain’s 10-year yield advanced six basis points to 0.60%

Commodities

• West Texas Intermediate crude rose 1.1% to $68.30 a barrel
• Gold futures fell 0.9% to $1,792.90 an ounce

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