Wall Street shares advance after cryptocurrency nervousness
Wall Street investors looked past last week’s cryptocurrency nervousness to send higher shares, led by the tech sector.
Tech stocks were the top performers on the S&P 500, boosting the blue-chip benchmark 1% at lunchtime in New York City, while the tech-focused Nasdaq Composite Index gained 1. 4%.
Energy stocks also climbed after Goldman Sachs forecast Brent, which jumped 3% to $ 68.51 a barrel on Monday, to hit $ 80 this year as economies recover from the pandemic.
Wall Street was rocked last week by the prospect that a cryptocurrency rout could spill over to other asset classes. Bitcoin fell 13% on Sunday, before rising 7% on Monday, although it remains over 40% below its April high.
Analysts are examining correlations between trends in cryptocurrency and other financial markets, such as richly priced tech stocks, citing the possibility that investors who have borrowed money to trade digital currencies may sell money. other assets to offset losses.
“The inter-asset consequences have been slight,” said John Normand, strategist at JPMorgan. But he warned that deflation of what he said was a $ 2 billion market could create “a substantial loss of wealth, which can impact the real economy by altering the balance sheets of households, businesses. and the banking sector ”.
The People’s Bank of China has warned financial institutions against using digital currencies for payments, while the U.S. government has said cryptocurrency transactions exceeding $ 10,000 should be reported to tax authorities.
Nearly nine in ten S&P listed companies beat first-quarter earnings guidance, according to DataTrek Research, according to DataTrek Research.
U.S. stocks would remain volatile, DataTrek’s Nicholas Colas said, until companies release their second quarter results and investors can assess whether the first three months of this year represented the peak of the recovery after the closings of industry last year.
“The volatility you see in overnight stock prices is the tussle between bullish and bearish earnings,” Colas said.
The yield on the 10-year US Treasury bill, which moves inversely to its price, slipped 0.03 percentage point to 1.61%.
This yield, which sets the tone for global equity valuations and borrowing costs, fell around 0.9 percent earlier in the year. It has remained in a narrow range over the past month as Federal Reserve rate regulators repeated a long-standing message that inflation jumps will be transient as the US economy recovers.
“I’m still leaning down on bonds,” said Jack McIntyre, bond portfolio manager at Brandywine Global, as the Fed prepares to talk about cutting its $ 120 billion in monthly bond purchases.
“But it will be more of a gradual slowdown,” he added, as investors in the euro zone and Japan, where government bond yields are lower, “find 1.6 % quite attractive ”.
In foreign currencies, the dollar index fell 0.2%. The measure of the greenback against the currencies of trading partners fell 3.6% in the last quarter.
“President Joe Biden’s plan to raise the corporate tax rate risks hurting the competitiveness of American producers and deterring investment in the country,” said Tan Kai Xian of research firm Gavekal.
The euro added 0.2 percent against the dollar at $ 1.2214, remaining around its highest point since January.
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