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Stocks Hit Record as Small Caps Jump; Dollar Gains: Markets Wrap

Rita Nazareth and Vildana Hajric
·3 min read
Stocks Hit Record as Small Caps Jump; Dollar Gains: Markets Wrap

(Bloomberg) -- Stocks extended their rally into a fourth day as investors parsed through a flurry of corporate results amid signs the U.S. labor market may be gradually improving. The dollar rose.

The S&P 500 climbed to a record, led by banks and tech shares, as the Russell 2000 Index jumped 2%. EBay Inc. and PayPal Holdings Inc. surged on upbeat forecasts, while Netflix Inc. gained after raising the price of its service in Japan. GameStop Corp. had another day of heavy losses, with this week’s plunge exceeding 80% as retail traders flocked to other corners of the stock market such as small drug developers. A widely watched segment of the Treasury yield curve steepened to levels last seen in 2015.

After the close of regular trading, Peloton Interactive Inc. slumped after saying it can’t keep up with surging demand for the company’s connected exercise machines and warned that profit will be squeezed as it tries to fix the problem. Ford Motor Co. rose as earnings beat analyst estimates.

The bull market in U.S. stocks remains on “solid footing” as the rebound in activity and corporate profits alongside an accommodative Federal Reserve create a supportive environment for equities, according to UBS Group AG. A report Thursday showed jobless claims fell to the lowest since November, and the next major update on the economy comes on Friday -- with analysts forecasting the labor market added about 100,000 jobs in January after a 140,000 drop in December. Selected high-frequency data, such as weekly consumer-confidence readings, also point to some strengthening.

“We certainly seem to have shifted our focus back to fundamentals,” said Arthur Hogan, chief market strategist at National Securities Corp. “The virus news is getting incrementally better at the very same time that the earnings season and economic data seem to be showing some improvement. Markets are actually focusing on what we’re supposed to be focused on and less concerned about the machinations of getting fiscal policy out and what’s going on in Reddit-land.”

The Reddit-fueled rumble in the U.S. stock market may have heightened fears of another burst of volatility, according to options data tracked by Bloomberg. Over the last two weeks, the Cboe Volatility Index’s futures curve has shifted markedly higher, showing a pronounced peak in April before a gradual decline. The move suggests investors expect more volatility in the short-term amid concerns about extended valuations, the pace of the vaccine rollout and the impact of retail-trading activity.

These are some of the main moves in markets:

Stocks

The S&P 500 rose 1.1% at 4 p.m. New York time.The Stoxx Europe 600 Index added 0.6%.The MSCI Asia Pacific Index decreased 0.6%.

Currencies

The Bloomberg Dollar Spot Index rose 0.4%.The euro dipped 0.6% to $1.1965.The Japanese yen depreciated 0.5% to 105.54 per dollar.

Bonds

The yield on 10-year Treasuries rose less than one basis point to 1.14%.Germany’s 10-year yield climbed one basis point to -0.45%.Britain’s 10-year yield jumped seven basis points to 0.44%.

Commodities

West Texas Intermediate crude rose 1.2% to $56.35 a barrel.Gold slid 2.2% to $1,794.01 an ounce.Silver sank 2% to $26.36 per ounce.

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