Tech leads stock recovery before the big option day: Markets Wrap

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(Bloomberg) – Shares rose in a volatile session ahead of Friday’s options expiring, which is forecast to be the second largest in recent history.

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Technology stocks drove up the shares when the giant chip maker Nvidia Corp. increased their prospects. Macy’s Inc. and Kohl’s Corp. increased the pace of retailers after signaling that consumer demand remains robust. The Dow Jones Industrial Average underperformed when Cisco Systems Inc., the largest maker of data networking equipment, gave a weak projection. Shares fell earlier on Thursday over concerns that Democratic Senator Joe Manchin’s vote on President Joe Biden’s economic package known as Build Back Better may not be a lock.

“Equities are likely to remain under pressure throughout the week until Friday’s options expire, in line with what we have seen during most of the exit weeks this year,” said Russ Visch, BMO Capital Markets’ technical analyst, in a comment. “After that, we expect the bias for equities to remain on the upside.”

The next six months may see the S&P 500 reach 5,200 in an environment of reduced monetary stimulus and overperformance of cyclical companies, according to UBS Global Wealth Management. That would mean a rally of 11% from Wednesday’s closing. 2022 is expected to be a year with two halves – the first characterized by high economic growth and inflation and the second by lower growth and reduced price pressure, says Mark Haefele, Investment Manager at the bank.

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Some other business highlights:

  • US-listed Chinese stocks plummeted after e-commerce giant Alibaba Group Holding Ltd’s disappointing revenue prospects.

  • CVS Health Corp. rose after saying they will close 900 stores over the next three years and charge a fee of as much as $ 1.2 billion.

  • US health insurance companies say they want more proof before paying for Biogen Inc.’s Aduhelm, which stops sales of the costly new Alzheimer’s therapy that the company hailed as a breakthrough for patients.

Mortgage costs are rising again. The average fixed interest rate on a 30-year mortgage has risen to 3.10%, up from 2.98% last week and the highest since October 28, Freddie Mac said on Thursday. Borrowing costs rose together with interest rates on 10-year government bonds. Interest rates, which have been historically low for over a year, have flipped in recent weeks as investors prepare for the Federal Reserve to begin reducing its bond purchases.

Economists from JPMorgan Chase & Co. said they now expect the Fed to raise interest rates in September next year, which will be the latest on Wall Street to release a forecast that the central bank will be on ice by 2022. Analysts from Goldman Sachs Group Inc. said last month that they expect a Fed hike in July. Their Morgan Stanley counterparts still see officials not changing prices next year.

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What to see this week:

For more market analysis, read our MLIV blog.

Some of the most important movements in the markets:

Stock

  • The S&P 500 rose 0.3% at 12:15 New York time

  • Nasdaq 100 rose 1 percent

  • Dow Jones Industrial Average fell 0.1%

  • The MSCI World Index changed slightly

Currencies

  • Bloomberg Dollar Spot Index fell 0.1%

  • The euro rose 0.5% to $ 1.1370

  • The British pound changed slightly at $ 1.3494

  • The Japanese yen changed slightly at 114.19 per dollar

Bonds

  • The yield on 10-year government bonds changed slightly by 1.58%

  • Germany’s 10-year return fell three points to -0.28%

  • The UK’s 10-year return fell four points to 0.92%

Merchandise

  • West Texas Intermediate crude rose 0.3% to $ 78.63 a barrel

  • Gold futures fell 0.3% to $ 1,866.50 per ounce

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