A man looks at an electronic stock board showing a chart of the Nikkei Stock Average outside a securities firm in Tokyo, Japan (Photographer: Tomohiro Ohsumi/Bloomberg)

Stocks Rally on Tech Surge to Close Volatile Month: Markets Wrap

(Bloomberg) -- U.S. stocks rallied for a second day to close out one of the worst months of the bull market on an upbeat note. The dollar added to a 16-month high and Treasury yields jumped.

The S&P 500 Index capped its biggest two-day surge since February, paring its biggest monthly decline since 2011 to 7 percent. The Nasdaq 100 Index jumped 2.3 percent, but still fell the most in any month during the bull market. Megacap tech shares that bore the brunt of October’s rout paced the Wednesday rebound, with Netflix and EBay surging more than 5 percent. The FANG cohort rallied after Facebook’s earnings topped expectations.

Private payrolls data calmed nerves about the strength of the economy, lifting the dollar. Treasuries fell after the government said it will raise the amount of long-term debt it sells this quarter.

“People have been skittish over the last month and it’s been pretty volatile, it’s unnerved a lot of folks,” Mike Loewengart, vice president of investment strategy at E*Trade Financial, said in an interview. “When we see a reading today such as ADP, it further illustrates that fundamentals remain sound.”

Stocks Rally on Tech Surge to Close Volatile Month: Markets Wrap

Equity bulls will be hoping this rebound can last following a series of bounces in the past few weeks that quickly gave way to declines as some $8 trillion was wiped off stock markets globally. The MSCI All-Country World Index has dropped almost 8 percent in October, the worst monthly performance since May 2012.

In Europe, miners and energy companies led the way as almost every sector on the Stoxx Europe 600 Index climbed. Italian bonds bucked a decline as the risk-on mood sent core European debt lower. The euro drifted down as inflation accelerated in October and underlying price pressures increased, handing policy makers a headache after growth data disappointed. The pound rebounded after Tuesday’s slump.

Corporate results may be key to sustaining the share gains: attention will next turn to earnings from Apple Inc. after the close on Thursday. But there are risks in the background, from the American midterm elections to trade talks with China. Meanwhile, the U.S. jobs report is due Friday -- private data surprised to the upside on Wednesday.

In Asia, Japanese stocks were the stand-out performers as indexes rose across the board. China’s overnight repo rate surged the most in more than four years as authorities take steps to combat bets against the yuan, which held near the weakest level in a decade against the greenback. The yen edged lower after the Bank of Japan left its monetary stimulus unchanged and kept its 10-year bond yield target at about zero percent.

Elsewhere, gold fell and oil edged up from a two-month low. In emerging markets, the Indian rupee pared a drop after the finance ministry moved to diffuse growing tensions with the central bank. Developing-nation stocks jumped as currencies edged lower.

Terminal users can read our Markets Live blog.

Here are some key events coming up this week:

  • This week’s earnings season highlights include: Macquarie, Apple, Alibaba, Credit Suisse, Exxon Mobil, and Shell.
  • A monetary policy decision is due in the U.K.
  • On Friday, the final U.S. jobs report before the November midterm elections may show hiring improved and that the unemployment rate held at a 48-year low.

And these are the main moves in markets:

Stocks

  • The S&P 500 Index advanced 1.1 percent as of 4 p.m. New York time.
  • The Nasdaq 100 rose 2.3 percent, and the Nasdaq composite added 2 percent.
  • The Stoxx Europe 600 Index surged 1.7 percent to the highest in almost two weeks on the biggest jump in seven months.
  • The MSCI Asia Pacific Index surged 2 percent to the highest in a week on the largest jump in almost eight months.
  • The MSCI Emerging Market Index gained 1.6 percent to the highest in a week on the biggest rise in almost three weeks.

Currencies

  • The Bloomberg Dollar Spot Index increased 0.2 percent to the highest in more than 17 months.
  • The euro fell 0.2 percent to $1.1322.
  • The British pound advanced 0.4 percent to $1.2761.
  • The Japanese yen decreased 0.1 percent to 112.93 per dollar, the weakest in almost four weeks.

Bonds

  • The yield on 10-year Treasuries increased two basis points to 3.14 percent. The rate at the end of September was 3.06 percent.
  • The two-year yield added two basis points to 2.87. It rose from 2.82 percent last month.
  • Germany’s 10-year yield advanced two basis points to 0.39 percent. The rate has fallen 9 basis points in October.

Commodities

  • West Texas Intermediate crude advanced 0.3 percent to $66.39 a barrel. Oil’s down 9 percent in the month, the most since July 2016.
  • Gold futures decreased 0.7 percent to $1,216.90 an ounce. It’s up 1.7 percent in the month.

©2018 Bloomberg L.P.