Despite gains in the broader market, the technology sector weighed down the Nasdaq as Treasury yields increased. Core Durable Goods orders exceeded pre-pandemic levels and showed high demand for transportation items such as airplanes.
Markets rallied for a third day on an improved economic outlook, bolstered by the Fed’s Jerome Powell, who stated the economic decline and rally back to health is without modern precedent.
The Fed’s reassurances on the economic outlook from Wednesday turned investors optimistic and sent indexes higher. Energy and Financials topped the sector list for a second day, two sectors that often lead the market out of a slump.
The Fed’s optimistic view on the economy and reluctance to set an exact timeline for bond tapering got a positive reaction from investors. The US Dollar strengthened while the Treasury yield curve flattened.
Equity markets chopped up and down to end sideways while Treasury yields rose as investors remained cautious ahead of the Fed announcements on Wednesday.
The narrow gains that held up markets last week turned into broad selling today, causing a sharp decline in all four major indexes. Fears that China’s Evergrande would default on credit obligations exasperated worries over the health of the economy.
Indexes closed lower while volume soared on quadruple-witching Friday. Only the Russell 2000 was able to end the day with gains.
Better than expected Retail Sales data help the Consumer Discretionary sector advance to the top of the sector list. However, rising Treasury Yields subdued other sectors and sent three of the four major indexes to losses for the day.
Stocks rose on Wednesday after Crude Oil supplies signaled much higher demand than expected. That boosted the Energy sector by more than 3.5%, and the improved optimism drove broad gains across the market.
US Treasury Yields slid after the morning’s consumer price index data added more confusion to the economic picture. Is lower than expected inflation a good thing or a bad thing? What does it mean for Fed monetary policy? The unanswered questions equate to risk for investors, sending them to safer bets.