Up, Because Why Not?

By Matthew Klein |  Friday, September 25

Rally time. A volatile week for U.S. stocks ended with a big one-day gain. The S&P 500 index rose 1.6% on Friday, led by the most pandemic-sensitive stocks: the biggest winners included Norwegian Cruise Lines, Carnival Corporation, Royal Caribbean, Boeing, Live Nation Entertainment, United Airlines, American Airlines, Host Hotels, and MGM Resorts.

The gains were broad-based, with 432 of the S&P 500 components and 10 of the 11 sectors up on the day. Energy stocks were the worst performers,  but the sector as a whole was still down less than 0.1%. (Oil and gas prices were essentially flat.)

The market movements aren’t obviously justified by any news on the progression of the virus, but the recent economic data has been decent, with new home sales, manufacturers’ orders of durable goods, and jobless claims all continuing to move in the right direction despite the lack of government income support—and the lack of any legislation that would provide additional aid before the end of the year.

The simplest, but least satisfying, explanation is that Friday’s gains were simply another big swing over the course of a volatile week. Overall, the S&P 500 was down just 0.6% over the course of the last five trading sessions, but that small number hides the 3% swings in either direction earlier in the week. Of course, the broader trend for the past few weeks has been down. Since the peak on Sept. 2, the S&P 500 has lost 8% of its value while the tech-heavy Nasdaq Composite Index, which has generally done better, is down 10%.

Stocks were also up today in Canada, Japan, Korea, and India, although they were down sharply in Europe. Meanwhile, real yields on U.S. Treasury Inflation Protected Securities continued to grind higher even as nominal yields on regular Treasury debts continued to drop. That’s a bad scenario for gold and silver, both of which are down sharply from their recent highs, with gold down 10% and silver down 21%.

Watch our TV show on Fox Business Friday at 10 p.m. or 11:30 p.m. ET; Saturday at 10 a.m. or 11:30 a.m.; or Sunday at 7:30 a.m., 10:30 a.m., or 11:30 a.m. This week, see an interview with Merrill Lynch executive Andy Sieg on navigating the turbulent market. Plus, get more insights on Covid-19 research and companies leading health-care innovation from Geoffrey Porges, a senior biopharma analyst at SVB Leerink.