Stocks traded mixed on Friday as technology stocks came under renewed pressure. Treasury yields resumed their march higher.
The Dow extended Thursday’s gains, hitting a fresh intraday high. The S&P 500 dipped after setting a record closing high on Thursday. Bitcoin prices (BTC-USD) closed in on the all-time high the cryptocurrency set last month of more than $58,000.
The Nasdaq underperformed and dropped more than 1%. The move contrasted with the index’s outperformance on Thursday, when it ended higher by 2.5% to recover some losses from the past several weeks. The move Friday came alongside a tick higher in Treasury yields, as concerns over fast-rising inflation and a near-term tightening of monetary policy from the Federal Reserve lingered.
The benchmark 10-year Treasury yield hovered above 1.6%, about 50 basis points above levels from one month ago, but only slightly higher from the start of March. The rapid rise in rates earlier on in March had sparked a swift selloff across many tech stocks, with expectations of higher rates and borrowing costs weighing on the valuations of growth companies.
“This week’s U.S. bond auctions came and went without too much of a fuss and Treasury yields seemed to be settling into a new (higher) range,” Kit Juckes, Societe Generale macro strategist, said in a note Friday morning. “However, with the S&P 500 making a new high yesterday evening, we’ve taken 10-year Note yields back up to 1.6%, and [stocks are] lower this morning as a result.”
“The pattern seems clear enough: The equity market is seeing a sector rotation but not a correction; the bond market is seeking a new equilibrium in the light of a vastly improved economic outlook in both the U.S. and elsewhere; some policymakers are pushing back against the bond moves, with little success,” he added. “As yields rise, the dollar rallies, but when yields settle at a new level, the dollar drops back. The pattern probably goes on until bonds find an equilibrium, unlikely before the 10-year note yields have a 2-handle, judging by taper tantrums and past cycles.”
Thursday’s risk rally also came after President Joe Biden signed into law a $1.9 trillion coronavirus aid package, which will quickly provide another massive infusion of stimulus directly to Americans and small businesses. Most Americans are poised to receive $1,400 stimulus checks, which could arrive as soon as this weekend, the White House said.
Meanwhile, incrementally more positive news on the COVID-19 vaccine front also emerged. Shares of Novavax (NVAX) surged more than 15% after a final analysis of the drugmaker’s COVID-19 vaccine trial in the UK showed the inoculation was 96.4% effective against mild, moderate and severe diseases caused by the original coronavirus. Analyses also showed the vaccine was 86.3% effective against the variant of the coronavirus circulating in the UK, and 55.4% effective against the variant circulating in South Africa.
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11:03 a.m. ET: Consumer spending of excess savings will depend on ‘whether it is viewed as wealth or deferred income’: Bank of America
Americans have been sitting on historic levels of savings as stay-in-place restrictions led consumers to save rather than spend on discretionary activities. Direct payments to consumers under Congress’s numerous stimulus packages have also helped boost income. As of January, the personal saving rate was 20.5% – a decrease from the record high of 33.7% in April 2020, but still sharply elevated compared to the 2019 monthly average of 7.5%.
As in-person activities begin to reopen, the degree to which consumers reopen their wallets will depend on how they view their newly amassed capital, according to Bank of America strategists.
“We have spent a lot of ink explaining the massive surge in excess savings and liquid assets in the past year. Here we try to answer a tougher question: how much of it is likely to be spent when the economy reopens?” Bank of America analysts wrote in a note Friday.
“The spending multiplier will mainly depend on whether people view the money saved as ‘wealth’ or ‘deferred income.’ If it is treated like wealth, we would expect a very low payout in the order of four cents on the dollar. If it seen as deferred income, the payout will be much higher, even if the money is mainly held by high-income households,” they added. “We lean toward the latter. Therefore, we expect the glut of excess savings to help support exceptional growth this year in addition to the tailwinds from fiscal stimulus and an improving virus picture.”
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10:50 a.m. ET: Dow reaches record high while Nasdaq dips
The Dow extended gains Friday morning to touch a fresh record high, as shares of Boeing, The Travelers Companies and Walgreens Boots Alliance outperformed.
The S&P 500 dipped slightly as the heavily weighted information technology and communications services sectors fell anew. However, the financials and industrials sectors outperformed.
The Nasdaq dropped 1.6%, reversing course after gaining on Thursday. Shares of Tesla dropped more than 3%, while Apple shed 2%.
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10:00 a.m. ET: Consumer sentiment increased to a one-year high in March, beating expectations: University of Michigan
U.S. consumer sentiment unexpectedly reached the highest level since March 2020 this month, according to the University of Michigan’s preliminary monthly survey, as prospects of mass vaccinations, additional stimulus and broad-based economic reopenings boosted confidence.
The headline consumer sentiment index rose to 83.0 in March from 76.8 in February, according to the institution. This marked the biggest increase since September, and brought the index to the highest level since the start of the pandemic. Consensus economists were looking for the sentiment index to rise to just 78.5, according to Bloomberg consensus data.
“Consumer sentiment rose in early March to its highest level in a year due to the growing number of vaccinations as well as the widely anticipated passage of Biden’s relief measures,” Richard Curtin, Surveys of Consumers chief economist at the University of Michigan, said in a statement. “The gains were widespread across all socioeconomic subgroups and all regions, although the largest monthly gains were concentrated among households in the bottom third of the income distribution as well as those aged 55 or older.”
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9:31 a.m. ET: Nasdaq opens sharply lower as tech stocks come under renewed pressure
Here’s where markets were trading Friday morning after the opening bell:
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S&P 500 (^GSPC): -19.78 points (-0.5%) to 3,919.56
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Dow (^DJI): +19.16 points (+0.06%) to 32,505.2
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Nasdaq (^IXIC): -201.24 points (-1.44%) to 13,205.88
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Crude (CL=F): -$0.27 (-0.41%) to $65.75 a barrel
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Gold (GC=F): -$22.40 (-1.30%) to $1,700.20 per ounce
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10-year Treasury (^TNX): +8.9 bps to yield 1.616%
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8:31 a.m. ET: Producer prices rise 0.5% in February, matching expectations
Producer prices rose for a tenth straight month in February and at a pace that matched consensus economist expectations, according to a release Friday from the Labor Department. The print came following a muted print on consumer price inflation earlier this week, pointing to still-tame inflationary pressures in the recovering economy.
Producer prices increased at a 0.5% month-over-month rate in February, slowing from January’s 1.3% increase, which had been the fastest monthly pace on record. A rise in prices for final demand goods again led the gain for February, while growth in prices for final demand services remained tepid with a 0.1% rise.
Excluding more volatile food and energy prices, the producer price index increased at a 0.2% monthly rate after a 1.2% rise in January, matching consensus expectations. Over last year, the index excluding food and energy rose 2.5%, or a tick lower than the 2.6% rise expected.
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7:30 a.m. ET Friday: Stock futures point to a mixed open as tech stocks drop
Here’s where markets were trading Friday morning:
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S&P 500 futures (ES=F): 3,921.5, down 15.75 points or 0.39%
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Dow futures (YM=F): 32,497.00, up 18 points or 0.06%
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Nasdaq futures (NQ=F): 12,867.75, down 180.5 points or 1.38%
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Crude (CL=F): -$0.16 (-0.24%) to $65.86 a barrel
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Gold (GC=F): -$19.80 (-1.15%) to $1,702.80 per ounce
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10-year Treasury (^TNX): +7.1 bps to yield 1.598%
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6:01 p.m. ET Thursday: Stock futures edge up
Here were the main moves in markets as of 6:01 p.m. ET:
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S&P 500 futures (ES=F): 3,938.5, up 1.75 points or 0.04%
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Dow futures (YM=F): 32,507.00, up 28 points or 0.09%
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Nasdaq futures (NQ=F): 13,058.5, up 10.25 points or 0.08%
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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