U.S. Stocks post biggest weekly gains since April: Markets Wrap

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November 7, 2020 8:42 AM

Without a massive spending bill, the Federal Reserve may increase its monetary support to keep the economic recovery on track.

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Bloomberg: U.S. stocks registered the biggest weekly increase since April with the labor market strengthening and Joe Biden on the verge of winning the presidential election.

The S&P 500 fell less than 0.05% in the wake of a four-day rally added more than $1.5 trillion to the value of stocks. The benchmark index climbed 7.3% this week. Technology again outperformed, with the Nasdaq 100 finishing green on Friday and up 9.4% this week. Hiring outpaced expectations in October, defying calls for a slowdown in the economy as the virus continues to spread at a record pace.

Investors remain focused on the outcome of the presidential election, where Joe Biden is widely expected to win a tight race. Democrats appear to have only a long-shot chance at Senate control, stoking expectation that any aid package will be thin and Biden won’t be able to roll back President Donald Trump’s tax cuts. Without a massive spending bill, the Federal Reserve may increase its monetary support to keep the economic recovery on track.

“Fiscal stimulus should be supportive even if it is less than expected, and we still expect a vaccine to become widely available by the second quarter of next year,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

Yields jumped after a report showed the labor market improved in October by more than forecast. Ten-year note yields climbed back above 0.80% and the dollar lingered at a more than two-year low.

Votes are still being tallied in the U.S., with Biden tightening his hold on the race by taking the lead over Trump in Georgia and Pennsylvania. The president, however, questioned the credibility of the election, raising the prospect of a long stalemate as he challenges the results.

“Markets have risen under a variety of political regimes, but where it seems to do the best is a period of divided government in Washington when you have limited prospects for sweeping changes in legislation that would affect very legislative sensitive industries,” said Jeffrey Kleintop, chief global investment strategist at Charles Schwab Corp.

The U.S. became the first country to top 100,000 coronavirus infections in a single day. Fed Chair Jerome Powell warned this week that mounting infection rates are a risk to the recovery. Meanwhile, France warned of a “violent” second wave as it joined European countries including Italy and Poland in reporting new highs in daily infections.

Elsewhere, crude oil declined for a second day and gold was little changed.

“Given the big rally that we’ve had over a couple days, it’s going to have to take a pause at some point,” said Jim Paulsen, chief investment strategist at Leuthold Group.

These are some of the main moves in markets:

Stocks

The S&P 500 Index was little changed at 3,509.44 as of 4:06 p.m. New York time, the first retreat in a week.

The Nasdaq 100 Index increased 0.1% to 12,091.35, reaching the highest in more than two months on its fifth straight advance.

The Stoxx Europe 600 Index declined 0.2% to 366.40, the first retreat in more than a week.

The MSCI All-Country World Index rose 0.2% to 592.85, reaching the highest in more than two months on its fifth straight advance.

Currencies

The Bloomberg Dollar Spot Index dipped 0.3% to 1,149.91, the lowest in more than two years.

The Japanese yen appreciated 0.2% to 103.29 per dollar, the strongest in eight months.

The euro gained 0.5% to $1.1881, the strongest in more than two months.

Bonds

The yield on 10-year Treasuries jumped six basis points to 0.82%, the biggest surge in more than a month.

The yield on 30-year Treasuries climbed eight basis points to 1.60%, the largest surge in more than a month.

Germany’s 10-year yield climbed two basis points to -0.62%.

Britain’s 10-year yield increased four basis points to 0.274%, the highest in more than a week.

Commodities

West Texas Intermediate crude decreased 3.6% to $37.40 a barrel, the biggest dip in more than a week.

Gold strengthened 0.1% to $1,952.39 an ounce, the highest in more than seven weeks.

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