Tech Fuels Rebound as Nasdaq 100, S&P 500 Gain 1%: Markets Wrap

(Bloomberg) -- Investors have finally been induced to buy the dip after a volatile week, suggesting Wall Street stocks may finally halt the longest losing losing streak since April. 

Tech led the market higher with the Nasdaq 100 climbing as much as 1.5%, while the S&P 500 rose . Among individual stock movers, Freddie Mac and Fannie Mae traded near eight-year highs on plans to release the mortgage giants from government supervision. United States Steel Corp. fell  after President Joe Biden blocked Nippon Steel Corp.’s proposed purchase of the company. 

The S&P 500 index notched intraday gains in the previous two sessions, only to close lower as investors weighed readouts suggesting the world’s largest economy was still going strong against the prospect of slower and shallower interest-rate cuts from the Federal Reserve. 

On Friday, data showed US manufacturing rose at a modest pace in December. The Institute for Supply Management’s gauge hit 49.3, topping estimates, but remained below 50, a level that indicates economic expansion. New orders rose to the highest since the start of last year. Treasuries dipped after the report while stocks held onto gains. 

Vital Knowledge’s Adam Crisafulli said the ISM readout was incrementally positive but “but it will reinforce worries about hawkish policy and elevated yields.”

A key afternoon vote on the House speaker could spark further swings. Mike Johnson’s reelection to the post will signal how united the GOP is behind the president-elect’s planned policies when he takes office in the weeks ahead.

“We really need to see more of that clarity on Jan. 20 for markets to have greater conviction,” Laura Cooper, global investment strategist at Nuveen, said on Bloomberg Television. “US exceptionalism will continue to be the dominant theme at least in the first half of the year, regardless of what some of those policies that come through are.”

Treasury yields climbed to their highs of the day after Richmond Fed President Tom Barkin said there are still upside risks to inflation and growth, underscoring his preference to keep interest rates restrictive for longer. The rate on the benchmark 10-year is nearly 20 basis points above the level prior to Jerome Powell’s hawkish turn at the Dec. 18 Fed meeting. 

The dollar drifted lower after setting a two-year high Thursday.

Biden’s decision to block the $14.1 billion sale of US Steel to Nippon Steel killed a high-profile deal that sparked a political firestorm and tensions between the US and Japan. Biden announced his formal decision on Friday after the case was referred to him by a US security review panel, ahead of a deadline early next week. 

“U.S. Steel will remain a proud American company — one that’s American-owned, American-operated, by American union steelworkers — the best in the world,” the president said in a statement.   

Shares of drinks makers declined after the US Surgeon General said labels on alcohol products like beer and wine should carry warnings of their links to cancer.  Constellation Brands Inc. slumped as much as 2.3% and Molson Coors Beverage Co. lost nearly 5%. In Brussels, Anheuser-Busch InBev NV, the maker of Budweiser beer, fell .

Chinese stocks extended the worst start to the year since 2016, reflecting worries about the growth outlook. The yuan fell to breach the psychological milestone of 7.3 per dollar for the first time since late 2023. The nation’s 10-year government bond yield slipped below 1.6% for the first time ever. 

“There’s been many false dawns in China in recent months and it looks as though it’s unraveling again,” said Kenneth Broux, a strategist at Societe Generale. “We’ve seen three big days of selling which is not really conducive to sentiment.”

In commodities, WTI crude extended a climb into the fifth day to approach $74 a barrel. Gold trimmed its weekly gain.

Some of the main moves in markets:

Stocks

• The S&P 500 rose 1.1% as of 1:20 p.m. New York time
• The Nasdaq 100 rose 1.5%
• The Dow Jones Industrial Average rose 0.7%
• The MSCI World Index rose 0.8%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.3% to $1.0298
• The British pound rose 0.3% to $1.2421
• The Japanese yen rose 0.2% to 157.19 per dollar

Cryptocurrencies

• Bitcoin rose 1.2% to $98,302.32
• Ether rose 4% to $3,589.55

Bonds

• The yield on 10-year Treasuries advanced two basis points to 4.58%
• Germany’s 10-year yield advanced five basis points to 2.43%
• Britain’s 10-year yield was little changed at 4.59%

Commodities

• West Texas Intermediate crude rose 1.4% to $74.14 a barrel
• Spot gold fell 0.6% to $2,640.98 an ounce

This story was produced with the assistance of Bloomberg Automation.

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