U.S. stocks roar back after Powell’s reassurance

The S&P 500 Index erased a drop and climbed higher after reassuring comments from Federal Reserve Chairman Jerome Powell on inflation and the outlook for growth.

The benchmark stock gauge had declined as much as 1.8 per cent earlier in the day amid a rout in technology shares on concern the high-flying stocks had become overvalued. The Nasdaq 100 was on the cusp of erasing a loss that reached 3.5 per cent after Powell signaled the Federal Reserve was nowhere close to pulling back on its support for the economy. Airlines, lodging companies and cyclical shares set to benefit from the end of pandemic lockdowns outperformed.

So-called growth shares are having their worst month against value counterparts in more than two decades as vaccination campaigns gather pace and bond yields hover near a one-year high. Bets on faster growth have pushed the gap between 5- and 30-year yields to the highest level in more than six years.

Investors are growing concerned that some pockets of the equity market have already priced in much of the prospective global recovery spurred by vaccines and U.S. spending. As Powell reassured investors on stimulus, he voiced expectations for a return to more normal, improved activity later this year and said that higher bond yields reflected economic optimism.

Elsewhere, stocks in Asia were mostly higher as European shares slumped. Bitcoin tumbled below US$50,000 after a bout of volatility highlighted lingering doubts about the durability of the token’s rally.

These are some of the main moves in markets:

Stocks

The S&P 500 Index rose 0.3 per cent as of 3:15 p.m. New York time.
The Stoxx Europe 600 Index fell 0.4 per cent.
The MSCI Asia Pacific Index rose 0.1 per cent.
The MSCI Emerging Market Index was little changed.

Currencies

The Bloomberg Dollar Spot Index fell 0.1 per cent.
The euro fell 0.1 per cent to US$1.2147.
The British pound rose 0.3 per cent to US$1.411.
The Japanese yen fell 0.2 per cent to 105.28 per dollar.

Bonds

The yield on 10-year Treasuries fell one basis point to 1.36 per cent.
Germany’s 10-year yield jumped two basis points to -0.32 per cent.
Britain’s 10-year yield rose four basis points to 0.72 per cent.

Commodities

West Texas Intermediate crude rose 0.3 per cent to US$61.88 a barrel.
Gold fell 0.3 per cent to US$1,804.52 an ounce.

 



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