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Stocks Higher Following Monday’s Selloff; Oil Rally Builds

Tuesday, 5 October 2021 -


U.S.

  • Dow Jones: +0.9%

  • S&P: +1.1%

  • Nasdaq: 1.3%


While supply-and-demand pushed energy prices to record highs, U.S. stocks ended up on Tuesday after Monday’s sell-off. A typical and in a way expected seasonal volatility, while September and October are the months during which selloffs are often observed, keep the stock market in a shake state.


Investors have several concerns, namely:


  • Inflation

  • Covid-19’s continued effect on the economy

  • Future Fed’s tightening monetary policy

  • U.S. government possible default on its debt

  • Supply-chain complications

  • Surging commodity prices


Technology stocks climb following Monday’s sharp losses


  • Facebook: +2.1% to $332.96

  • Microsoft: +2% to $288.76

  • Amazon: +1% to $3,221.00

  • Apple: +1.4% to $141.11


As a general rule, Tech stocks’ performance is highly correlated to bond yields. The rise in bond yields has been the driver behind the selloff in tech stocks.


The U.S. 10-year Treasury yield, is the benchmark reading to where inflation is headed, hence investors’ scepticism on the Fed’s assessment that high inflation was temporary. On Tuesday, it rose to 1.528% from 1.481% on Monday.


In the meantime, energy prices surge:


West Texas Intermediate, the U.S. oil benchmark rose + 1.7% to $78.93 a barrel, ending at its highest level since October 31, 2014.


Natural-gas prices took off on concerns about a shortfall in stockpiles heading into winter.


U.S. gas futures rose 9.5% to $6.31 per million British thermal units, the highest settlement price since 2008.


Europe


European stocks closed higher Tuesday to bounce back from losses suffered during the previous day, while US indices extended their gains.


The STOXX Europe 600, which includes around 90% of the market capitalization of the European market in 17 countries, was up 5.26 points, or 1.17%, to close at 456.03.


London's FTSE 100 rose 66 points, or 0.94%, to 7,077, while Germany's DAX 30 index added almost 158 points, or 1.05%, to 15,194.


The French CAC 40 increased 98 points, or 1.52%, to 6,576. Spain's IBEX 35 rose 135 points, or 1.54%, to 8,927.


Italy's FTSE MIB was the best performer of the day, soaring 495, or 1.95%, to 25,956 points.

The rise came despite Eurozone services Purchasing Managers’ Index (PMI) falling to 56.4 in September, reaching its lowest level since April, according to London-based global data company IHS Markit.


The expectations index also fell to 8.0 in October, from 9.0 in September, to its lowest level since May 2020. It marked its fifth monthly decline in a row.


Bitcoin


After climbing above the critical threshold of $50,000 late Monday, Bitcoin was at $55,055 -- a 3% increase.


(Written and edited by: The Decision Maker)