Tech Leads Gains in Stocks as Inflation Fears Ease: Markets Wrap

(Bloomberg) -- Technology shares led gains in U.S. stocks as inflation anxiety appeared to be easing. Bitcoin surged after a weekend rout.

Ten out of the 11 groups in the S&P 500 rose, while the Nasdaq 100 outperformed major equity benchmarks amid a rally in giants such as Apple Inc., Amazon.com Inc. and Tesla Inc. The world’s largest cryptocurrency soared after plunging as much as 18% on Sunday. Benchmark 10-year Treasury yields and the dollar retreated.

While several analysts are warning it may be too early to signal the all-clear on inflation pressures, weaker-than-expected economic data have helped quell investor worries. Federal Reserve Governor Lael Brainard, Atlanta Fed President Raphael Bostic and St. Louis’s James Bullard said they wouldn’t surprised to see bottlenecks and supply shortages push prices up in coming months as the pandemic recedes and pent-up customer demand is unleashed -- but much of those price gains should prove temporary.

“The Fed continues its wait-and-see posture, which added wind beneath the tech sector’s wings,” said Chris Larkin, managing director of trading and investing product at E*Trade Financial. “Stocks head into the final full week of the month trying to break a two-week bull-bear stalemate.”

For Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter, inflation fears will remain a headwind for stocks until it becomes clear that any potential price pressures won’t last long.

“Until then, expect a more volatile market,” he wrote in a note to clients. “But at this point, strong policy support for stocks remains very much in place, and that’s a good thing.”

Some other corporate highlights:

• Virgin Galactic Holdings Inc. soared after the company founded by British billionaire Richard Branson conducted a test flight to space for the first time in more than two years.
• Beyond Meat Inc. jumped as the plant-based protein producer was upgraded to outperform at Bernstein.

Here are some events this week:

• Bank of Indonesia rate decision Tuesday, Reserve Bank of New Zealand policy decision Wednesday, Bank of Korea rate decision Thursday.
• CEOs of the largest U.S. banks, including JPMorgan and Goldman Sachs, will testify before lawmakers in the Senate Banking and House Financial Services committees Wednesday.
• U.S. initial jobless claims, GDP, durable goods, pending home sales on Thursday.

These are some of the main moves in markets:

Stocks

• The S&P 500 rose 1% as of 4 p.m. New York time
• The Nasdaq 100 rose 1.7%
• The Dow Jones Industrial Average rose 0.5%
• The MSCI World index rose 0.7%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%
• The euro rose 0.3% to $1.2216
• The British pound was little changed at $1.4158
• The Japanese yen rose 0.2% to 108.77 per dollar

Bonds

• The yield on 10-year Treasuries declined one basis point to 1.61%
• Germany’s 10-year yield declined one basis point to -0.14%
• Britain’s 10-year yield declined two basis points to 0.81%

Commodities

• West Texas Intermediate crude rose 3.7% to $66 a barrel
• Gold futures rose 0.4% to $1,886 an ounce

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