Business Maverick

Business Maverick

Nasdaq 100 Powers Into Bull Zone in Stock Rebound: Markets Wrap

Nasdaq 100 Powers Into Bull Zone in Stock Rebound: Markets Wrap

The stock market saw a strong rebound on Thursday, with banks halting their selloff and traders piling into some of the world’s largest technology companies that are seen by many on Wall Street as a kind of shelter in times of stress and economic uncertainties.

A rally in megacaps like Apple Inc. and Microsoft Corp. drove the Nasdaq 100 toward its highest level since August, with the gauge topping the threshold of a bull market after surging over 20% from its December low. In the wake of the banking turmoil that has rattled markets around the globe, the cohort of tech stalwarts that are flush with cash seems to be back in vogue. The tech-heavy gauge has largely outperformed other benchmarks this month.

Also helping sentiment was a recovery of beaten-down financial shares. First Republic Bank snapped back alongside its regional peers, following a rout that was driven by disappointment over comments from Treasury Secretary Janet Yellen that dashed speculation the government would mount a massive extension to its deposit insurance program. The KBW Bank Index gained as much as 1.6% on Thursday, paring what had been an almost 30% plunge in March.

“Bottom line, the late-day selloff in equities yesterday was once again led by bank stocks after Treasury Secretary Yellen pushed back on the idea of expanded deposit insurance levels and today, that means bank stocks will again be in focus,” said Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. “If banks are able to stabilize, stocks broadly should be able to as well, but if we see more selling pressure, expect more volatility.”

In other corporate news, Block Inc. tumbled after Hindenburg Research said it’s betting on a decline in the stock, alleging the payments company led by Jack Dorsey facilitated fraudsters who took advantage of government stimulus programs during the pandemic. Block didn’t immediately respond to an email request for comment from Bloomberg News before regular business hours.

Bond Market

Bond traders traders are zeroing in on just how much the ongoing turmoil in the banking system might tighten credit conditions and hurt the US economy, potentially forcing the Federal Reserve to cut interest rates.

The three-year Treasury yield is close to 30 basis points below where its stood the day before the Fed decision, while swap rates linked to policy meeting dates now show the US central bank benchmark ending 2023 around three quarters of a point below its new, post-decision level.

“The push-and-pull between financial market stability and inflation that is receding more slowly than anyone would prefer will further complicate an already significant challenge for the Fed, increasing the risk of a policy misstep and keeping the door open for a potential recession on the horizon,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors.

On the economic front, applications for US unemployment benefits unexpectedly eased for a second week, underscoring a still-tight job market in which employers are reluctant to reduce headcount. Sales of new homes unexpectedly rose in February after a downward revision to the prior month, suggesting the housing market is beginning to stabilize after a tumultuous year.

Elsewhere, the Bank of England pushed ahead with another interest rate increase despite turmoil in the banking sector, predicting the UK economy will avoid a recession for now and that inflation remains a risk. The pound rose, and investors priced in more certainty of at least one more rate hike later this year.

Read: EU Regulators to Rethink Liquidity After Credit Suisse Unravels

Key events this week:

  • Eurozone S&P Global Eurozone Manufacturing PMI, S&P Global Eurozone Services PMI, Friday
  • US durable goods, Friday

Some of the main moves in markets:

Stocks

  • The S&P 500 rose 1.4% as of 11:46 a.m. New York time
  • The Nasdaq 100 rose 2.2%
  • The Dow Jones Industrial Average rose 1.2%
  • The Stoxx Europe 600 fell 0.2%
  • The MSCI World index rose 1.3%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.4%
  • The euro rose 0.4% to $1.0900
  • The British pound rose 0.4% to $1.2318
  • The Japanese yen rose 0.3% to 131.04 per dollar

Cryptocurrencies

  • Bitcoin rose 4.5% to $28,623.12
  • Ether rose 6.1% to $1,843.3

Bonds

  • The yield on 10-year Treasuries advanced three basis points to 3.46%
  • Germany’s 10-year yield declined 10 basis points to 2.23%
  • Britain’s 10-year yield declined seven basis points to 3.38%

Commodities

  • West Texas Intermediate crude rose 0.2% to $71.07 a barrel
  • Gold futures rose 1.9% to $2,004.70 an ounce

Gallery

Comments - Please in order to comment.

Please peer review 3 community comments before your comment can be posted

Daily Maverick Elections Toolbox

Download the Daily Maverick Elections Toolbox.

+ Your election day questions answered
+ What's different this election
+ Test yourself! Take the quiz