Tech Stocks Spur Rally After China Adds Stimulus: Markets Wrap

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Technology stocks fueled a rally after China ratcheted up stimulus to combat slowing growth. The pound turned higher after U.K. politicians voted down a Brexit deal.

The S&P 500 gained the most in more than a week, rising above the key 2,600 level -- which it failed to breach on three occasions last week -- for the first time in a month. The tech-heavy Nasdaq 100 recouped two days of losses after China announced more measures to boost its economy, easing concerns about the impact of the trade war. Netflix Inc. surged after saying it planned to raise prices, while the rest of the FAANG cohort rose by at least 2 percent.

The pound erased a decline against the dollar after British lawmakers overwhelmingly voted down a Brexit deal and planned a confidence vote on Prime Minister Theresa May’s government, spurring speculation Britain’s exit from the European Union could be derailed. The 10-year Treasury yield traded around 2.71 percent, while the dollar advanced against major peers. The euro dropped after European Central Bank President Mario Draghi said the economy is weaker than expected.

“The market today is reacting favorably to the second-largest economy in the world actually doing stimulus rather than trying to throttle their economy,” said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Co. “Tech has a lot to do with what happens in China also. The tech sector has more revenues coming from China than any other sector in the U.S.”

The potential stimulus in China and warm welcome it received from markets reflects the delicate balance underpinning 2019’s risk-asset rebound: The same weak macro data that prompted a sell-off at the end of last year has the potential to spur looser monetary policies and therefore ignite a rally. Plenty of risks are clouding the outlook, not least the ongoing U.S. shutdown and the increasingly frantic countdown to Brexit. Investors must also factor in corporate earnings as the results season gets underway.

Here are some important events coming up:

• Some of the world’s biggest banks announce earnings, including Bank of America, Morgan Stanley and Goldman Sachs. Alcoa, Indian IT company Mindtree, Netflix, Taiwan Semiconductor, American Express and BlackRock also post results.

These are the main moves in markets:

Stocks

• The S&P 500 Index rose 1.1 percent as of 4 p.m. New York time.
• The Stoxx Europe 600 Index advanced 0.4 percent.
• Germany’s DAX Index gained 0.3 percent.
• The MSCI Asia Pacific Index rose 1.1 percent.
• The MSCI Emerging Market Index gained 1.2 percent.

Currencies

• The Bloomberg Dollar Spot Index climbed 0.2 percent.
• The euro declined 0.5 percent to $1.1407.
• The British pound rose 0.2 percent at $1.284 after falling as much as 1.5 percent.
• The Japanese yen dropped 0.5 percent to 108.67 per dollar.

Bonds

• The yield on 10-year Treasuries rose one basis point to 2.71 percent.
• Germany’s 10-year yield decreased two basis points to 0.21 percent, the lowest in more than a week.
• Britain’s 10-year yield declined four basis points to 1.258 percent.

Commodities

• West Texas Intermediate crude climbed 3.1 percent to $52.08 a barrel.
• Gold fell 0.2 percent to $1,289.10 an ounce.

--With assistance from Cormac Mullen, Arie Shapira, Samuel Potter, Reade Pickert and Brendan Walsh.

To contact the reporters on this story: Randall Jensen in New York at rjensen18@bloomberg.net;Sarah Ponczek in New York at sponczek2@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Eddie van der Walt

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