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%…
Read More: Dow reaches fresh record high, tech stocks slide as Treasury yields climb