Stocks Rise as Cyclicals Beat Tech; Oil Rallies: Markets Wrap

Stocks Rise as Cyclicals Beat Tech; Oil Rallies: Markets Wrap
Sunil Jagtiani
·2 min read

(Bloomberg) -- U.S. stocks rose on Thursday, with gains in cyclical shares tempering declines in technology firms.

The S&P 500 advanced after initial jobless claims posted a larger-than-expected decline. The figures come ahead of Friday’s monthly payrolls report, which will help to shape expectations of when the Federal Reserve might start tapering stimulus. The small-cap Russell 2000 Index climbed, while the Nasdaq 100 underperformed. Oil rallied on news that Saudi Arabia and Russia have a tentative deal to gradually increase OPEC+ output in the coming months.

After a bumper six months, risk assets face challenges from Covid-19 variants and the prospect of diminishing monetary policy support amid inflation pressures in the second half of the year. That’s leading to predictions of a pickup in volatility and stirring questions about whether bets tied to economic reopening -- such as on cyclical stocks and higher longer-term Treasury yields -- will prosper.

“What we’re seeing at the moment is markets coming to the realization that they have to discount the risk -- the high probability I really should say -- that the Covid-19 virus will be with us for the foreseeable future,” Kyle Rodda, an analyst at IG Markets, said on Bloomberg Television. He added investors will reward countries with adequate vaccine capacity, helping to explain some of the strength of U.S. and European stocks relative to Asian equities.

Energy firms and banks led in Europe, with technology shares the biggest losers. Travel shares got a lift from a report that the U.K. plans to ease tourism rules. In Asia, most major equity markets posted modest declines after purchasing managers’ indexes suggested curbs imposed to fight the virus had sapped output in parts of the region.

Here are some events to watch in the markets this week:

ECB President Christine Lagarde speaks FridayThe U.S. jobs report is due Friday

These are some of the main moves in markets:

Stocks

The S&P 500 rose 0.2% as of 9:30 a.m. New York timeThe Nasdaq 100 fell 0.2%The Dow Jones Industrial Average rose 0.3%The Stoxx Europe 600 rose 0.5%The MSCI World index rose 0.1%The Russell 2000 Index rose 0.6%

Currencies

The Bloomberg Dollar Spot Index was little changedThe euro rose 0.1% to $1.1870The British pound fell 0.2% to $1.3808The Japanese yen fell 0.3% to 111.42 per dollar

Bonds

The yield on 10-year Treasuries was little changed at 1.46%Germany’s 10-year yield was little changed at -0.20%Britain’s 10-year yield was little changed at 0.72%

Commodities

West Texas Intermediate crude rose 3.4% to $75.99 a barrelGold futures rose 0.5% to $1,780.30 an ounce

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