U.S. Stocks Gain the Most Since August; Oil Jumps: Markets Wrap

(Bloomberg) -- Stocks rose the most in almost three weeks as the concern that has weighed on investor sentiment about a slowdown in economic growth eased. Crude oil jump and bond yields rose.  

Energy shares helped push the S&P 500 up 0.9% and into positive territory for only the second time in eight trading sessions. The tech-heavy Nasdaq 100 rose for the first time in more than a week. Treasuries fell after rallying Tuesday on a lower-than-forecast inflation report, while the dollar weakened against most major peers.

After surging 20% to record highs through the first eight months of the year, the S&P 500 began September on a losing note as concern increased that a pullback in stimulus and the delta variant of the Covid 19 virus risked derailing the recovery from the pandemic. The S&P hasn’t closed higher by 1% or more since July 23. 

“In this case, investors might be chasing economic breadcrumbs, like Hansel and Gretel,” said Mike Bailey, director of research at FBB Capital Partners. “Investors are showing their growing enthusiasm every step of the way as we inch toward a full economic recovery.”

Composite volume across all exchanges surpassed 10 billion shares for the third straight day on Tuesday, the longest streak since mid-June, according to data compiled by Frank Cappelleri at Instinet LLC.

Oil clung to gains after a U.S. government report showing a bigger-than-expected decline in crude stockpiles signaled a rapidly tightening market. Global benchmark Brent crude rose above $75 a barrel for the first time since early August, while U.S. crude futures surged as much as 3.6% on Wednesday.  

While Tuesday’s U.S. inflation print could be seen as reducing pressure on the Federal Reserve to start pulling back on loose monetary policy, investors remain wary of a range of obstacles. These include the impact of the delta virus variant and rising costs on economic reopening, as well as China’s drive to rein in private industries. 

“We have tested the 50-day average on the S&P 500. You could argue nine to ten times this year, we never broke it with any conviction,” Darrell Cronk, chief investment officer at Wells Fargo Wealth and Investment Management, said during an interview with Bloomberg TV. “Everybody is worried about where the next 5 to 10% correction comes from. What nobody is thinking about is that the next 10% move could be to the upside.”

Going into the year-end, investors will also have to digest debate around the U.S. debt ceiling, President Joe Biden’s tax package, infrastructure spending and Fed tapering, she added.

Asian stocks dropped after reports showed China’s economy took a knock in August from stringent virus controls and tight curbs on property and as authorities told major lenders to China Evergrande Group not to expect interest payments due next week on bank loans. A debt restructuring could raise the prospect of wider social unrest and contagion in credit markets.

Here are some events to watch this week:

• Quadruple witching day for U.S. markets, Friday

For more market analysis, read our MLIV blog.

Some of the main moves in markets: 

Stocks

• The S&P 500 rose 0.8% as of 4:04 p.m. New York time
• The Nasdaq 100 rose 0.8%
• The Dow Jones Industrial Average rose 0.7%
• The MSCI World index rose 0.3%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%
• The euro rose 0.1% to $1.1818
• The British pound rose 0.2% to $1.3844
• The Japanese yen rose 0.3% to 109.36 per dollar

Bonds

• The yield on 10-year Treasuries advanced two basis points to 1.30%
• Germany’s 10-year yield advanced three basis points to -0.31%
• Britain’s 10-year yield advanced four basis points to 0.78%

Commodities

• West Texas Intermediate crude rose 3.1% to $72.65 a barrel
• Gold futures fell 0.7% to $1,795.30 an ounce

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