Nasdaq 100 Extends Rally as Treasury Yields Tumble: Markets Wrap

(Bloomberg) -- As traders pared their bets on the pace of tightening by the Federal Reserve, stocks climbed to another record and bond yields slumped. 

Technology and retail shares drove gains in the S&P 500, while the Nasdaq 100 extended its rally into a ninth straight day -- the longest winning run since December. A bullish outlook from chip giant Qualcomm Inc. added to signs the industry crunch is easing. Short-maturity U.S. Treasury yields sank as global investors reassessed the outlook for monetary policy after the Bank of England defied expectations by keeping rates on hold.

The decision followed weeks of speculation that the BOE would become the first major central bank to raise borrowing costs since the start of the pandemic. It also came a day after Fed Chair Jerome Powell announced a start to a reduction in asset purchases, while saying officials can be patient on hikes. Interest-rate futures, which had priced in two quarter-point increases in 2022, shifted the second one into 2023.

“We thought that the extent of market pricing for Fed hikes really around the middle of next year was awfully full, and that should come down,” Mark Cabana, head of U.S. rates strategy at Bank of America Global Research, told Bloomberg Television. “It has come down, especially with the Bank of England guidance that we have received.”

Applications for U.S. state unemployment benefits fell last week to the lowest since March 2020, pointing to fewer dismissals amid strong demand for labor. The data precede Friday’s employment report, which is forecast to show nonfarm payrolls rose by 450,000 in October.

“So far this week we’ve gotten pretty good news on the labor-market front,” said Mike Loewengart, managing director of investment strategy at E*Trade Financial. “With the Fed starting to take a step back from their accommodative stance, in aggregate, this could stand as another proof point of solid gains when it comes our economic recovery.”

After the close of regular trading:

• Peloton Interactive Inc. cut its annual revenue forecast by as much as $1 billion and lowered its projections for subscribers and profit margins, underscoring the fitness company’s struggles to adjust to a post-pandemic economy.
• Airbnb Inc. reported record sales and earnings that beat analysts’ estimates, proving the vacation-rental giant’s resilience even as the delta variant of Covid-19 prompted new travel concerns and restrictions.
• Uber Technologies Inc. forecast adjusted income for the fourth quarter that fell short of expectations, overshadowing its first quarterly profit as a public company.

Read: OPEC+ Rejection Puts Solution to High Oil Price in Biden’s Hands

Here are some events to watch this week:

• U.S. unemployment, nonfarm payrolls, Friday

For more market analysis, read our MLIV blog.

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.4% as of 4 p.m. New York time
• The Nasdaq 100 rose 1.3%
• The Dow Jones Industrial Average was little changed
• The MSCI World index rose 0.4%

Currencies

• The Bloomberg Dollar Spot Index rose 0.4%
• The euro fell 0.5% to $1.1557
• The British pound fell 1.4% to $1.3502
• The Japanese yen rose 0.3% to 113.71 per dollar

Bonds

• The yield on 10-year Treasuries declined eight basis points to 1.52%
• Germany’s 10-year yield declined six basis points to -0.22%
• Britain’s 10-year yield declined 13 basis points to 0.94%

Commodities

• West Texas Intermediate crude fell 2.1% to $79.13 a barrel
• Gold futures rose 1.8% to $1,794.90 an ounce

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