Accentuate the Positive

By Jeffrey Cane | Friday, July 9

Rebound. Summer Fridays aren’t quite the same with many of us still working from home, but today’s market had the feel of a midsummer Friday: a little more relaxed, upbeat even, and focused on getting things done early in the day.

The end-of-the-week spark started in the Treasury market, which had been rallying as worries grew that coronavirus variants could thwart a global economic recovery. Today, however, that rally ran out of steam, pushing yields, which move in the opposite direction from prices, higher. Stocks soon followed, rebounding broadly from yesterday's sharp declines -- all 11 S&P 500 sectors ended higher --  with the major indexes closing at records. 

The 10-year Treasury rose to 1.35% after falling to near 1.25% on Thursday. The yield on the 10-year has still fallen for two consecutive weeks.

“Like a game of seesaw, the falling bond market appeared to give stocks a boost early Friday,” said J.J. Kinahan, TD Ameritrade’s chief market strategist.

The S&P 500 rose 1.1%, the Dow Jones Industrial Average advanced 1.35%, while the Nasdaq Composite and the Russell 2000 both ended up around 1%. Crude oil rose 2.2%, but was down for the week for the first time since late May.

Optimism over the economic outlook may not have suddenly returned, but there were a few positive developments on that front today. Pfizer says it is working on a booster shot to combat the Delta variant, while the People’s Bank of China reduced the amount of cash its banks must hold in reserve. Barron's Reshma Kapadia writes that the central bank’s cut in its reserve requirement ratios “marked the first move to bolster liquidity in the economy since it was in the throes of the coronavirus.”

Today may have been a rally in relief that perhaps things – China, inflation, slowing growth, the pandemic – are not quite as bad as they have seemed. Next week will test that theory as the big banks kick off earnings season, inflation reports are released, and Federal Reserve Chairman Jerome Powell makes another trip to Capitol Hill. Enjoy the weekend. 

DJIA: +1.30%, to 34,870.16
S&P 500: +1.13% to 4369.55
Nasdaq: +0.98% to 14,701.92

The Hot Stock: Discover Financial Services +6.2%
The Biggest Loser:  Biogen -3.0%

Best Sector: Financials +2.9%
Worst Sector: Utilities +0.1%