Stocks Briefly Erase Pandemic Losses; Oil Rallies
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U.S. stocks briefly surpassed the all-time closing high reached before the coronavirus pandemic, propelled by surging technology shares. The dollar weakened, and Treasury yields rose to five-week highs.
The S&P 500 climbed 1.4% on Aug. 12, momentarily topping the 3,386.15 level reached Feb. 19, and capping the more than 50% rally since the market lows in March. The record intraday high of 3,393.52 was set the same day. Ten of the benchmark index鈥檚 11 industry sectors rose Aug. 12, led by technology, health care and consumer discretionary shares. The Nasdaq Composite outperformed the S&P as Apple Inc., Microsoft Corp. and Tesla Inc. jumped. In Europe, the Stoxx Europe 600 Index rose for a fourth day.
鈥淭he main force that鈥檚 been driving markets the last few weeks has really been momentum,鈥 said Kevin Caron, portfolio manager for Washington Crossing. 鈥淲e鈥檝e got a market that鈥檚 focused on the good case outcome for the virus, we鈥檝e got a market that has taken a great deal of comfort in that fiscal policy is going to be there to support an economy through tough times.鈥
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Treasury yields dropped from the highs of the day after the government鈥檚 sale of $38 billion in 10-year notes attracted stronger-than-forecast demand.
Silver joined gold in rebounding, as investors decided the flight from precious metals driven by advancing bond yields had gone too far.
鈥淚t was just a matter of time. Once we hit 3,300, I think everybody knew we鈥檇 get to the new record before long,鈥 said Matt Maley, chief market strategist at Miller Tabak + Co. 鈥淭he question is whether we鈥檒l rally further now that we鈥檝e got it. I think we鈥檒l take a breather now that we鈥檝e reached the new high, which would actually be quite healthy.鈥
After setting a new peak Aug. 7 above $2,070 an ounce, bullion had since tumbled as much as 10%. Crude futures posted a five-month high in New York trading after an industry report pointed to a third straight weekly drop in American crude stockpiles.
Elsewhere, Europe鈥檚 corporate bond spreads narrowed to their tightest since early March, just a few basis points off pre-virus levels, according to a Bloomberg Barclays index.
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