Stocks traded higher on Friday, shaking off losses from earlier this week. Investors considered the latest batch of earnings and economic data and continued to contemplate the path forward for monetary policy.
The S&P 500 rose, though the index was on track to post a weekly decline for the first time in three weeks. Both the Nasdaq and Dow also moved to the upside.
Traders this week have watched a number of market concerns unfold, with infections related to the Delta variant continuing to climb and the Federal Reserve suggesting in its latest meeting minutes that officials believed the economy might recover enough by the end of the year to warrant a shift in their massive asset purchase program. New weekly jobless claims fell more than expected to a fresh pandemic-era low, signaling a notable step forward in the labor market’s recovery.
Meanwhile, corporate earnings results have come in mostly robustly, though many companies have highlighted supply chain constraints and input price increases as potential ongoing headwinds. Manufacturing bellwether Deere (DE) beat estimates for fiscal third-quarter results and raised its full-year profit guidance, but the company noted these results came “while enduring significant supply-chain pressures.” FootLocker (FL) also posted results that exceeded estimates Friday morning as more foot traffic returned, though the retailer also highlighted that it continues “to keep a close eye on the business, including temporary store closures and supply chain challenges, and we remain disciplined with expense management.”
“There are a lot of risks out there right now. First of all, the market is looking stretched from a valuation perspective. It’s continued to make record highs, even amidst some of the volatility that we’ve seen,” Megan Horneman, director of portfolio strategy at Verdence Capital Advisors, told Yahoo Finance. “But we do have some economic concerns right now, just from the supply chain perspective, the inflation perspective. These things are probably going to be a problem for us longer than we had anticipated.”
“I think the biggest concern in the equity market would be a taper tantrum,” she added. “Interest rates are so stubbornly low. And I think that markets are just waiting there to see if we get some big move higher in interest rates.”
Others suggested the ultimate market reaction to the Fed’s eventual tapering announcement and commencement will be short-lived.
“Given recent Fedspeak, and the upcoming Jackson Hold Symposium and September FOMC meeting, the timing of the Fed’s reduction of asset purchases has been a widely discussed topic with many of our clients we speak to seemingly convinced that the stock market will have a tantrum once the tapering is announced,” Brian Belski, BMO Capital Markets chief investment strategist, said in a note.
“For our part, we do not think tapering will cause any sort of prolonged market havoc,” he said. “Even when the Fed begins reducing the pace of its bond purchases, the size of its balance sheet will remain very large for quite some time, which should continue to be supportive of U.S. stocks.”
4:07 p.m. ET: Stocks end higher
Here were the main moves in markets as of 4:07 p.m. ET:
S&P 500 (^GSPC): +35.87 (+0.81%) to 4,441.67
Dow (^DJI): +225.96 (+0.65%) to 35,120.08
Nasdaq (^IXIC): +172.88 (+1.19%) to 14,714.66
Crude (CL=F): -$1.44 (-2.26%) to $62.25 a barrel
Gold (GC=F): +$1.00 (+0.06%) to $1,784.10 per ounce
10-year Treasury (^TNX): +1.8 bps to yield 1.2600%
12:44 p.m. ET: Bitcoin jumps more than 6% to rise above $48,000 after Coinbase announces $500 million in crypto investments
Bitcoin (BTC) jumped more than 6.5% to break above $48,000 on Friday after Coinbase Global (COIN) announced it was committing to investing $500 million of its cash and cash equivalents into digital currencies and assets.
The announcement, made via a blog posted from Coinbase Chief Financial Officer Alesia Haas, went on to specify that the company will also allocate 10% of its quarterly net income into crypto assets. These include ethereum, proof of stake assets, DeFi tokens and other crypto assets in addition to Bitcoin.
Ethereum prices rose more than 6% to trade above $3,200. Shares of Coinbase also gained more than 4%.
10:23 a.m. ET: Expect a sharp rebound in growth once the latest virus spread abates: BofA
The spread of the Delta variant both domestically and abroad has weighed heavily on the markets, raising concerns that the virus will once again stem growth.
According to Bank of America, the disruptions caused by the Delta variant will likely prove short-lived, and generate yet another reopening-related jump in activity once this latest threat attenuates.
“The U.S. slowdown is due to both the surge in COVID cases and severe supply-side constraints,” Ethan Harris, global economist for Bank of America Global Research, said in a note. “China’s slowdown is mainly due to policy tightening, combined with a slow response to the weaker data. In both instances we expect a return to solid growth starting in 4Q.”
“While we believe there will be some permanent growth destruction from Delta, it is more a change in the timing of growth, in our view,” he added. “Once the Delta threat is reduced and this COVID wave subsides, we should see the return of pent-up spending for leisure services. Some categories will have a bigger bounce than others—perhaps travel more than restaurants/bars, for example—but we should see people reengage in these activities.”
9:30 a.m. ET: Stocks open higher, shaking off pre-market losses
The S&P 500 opened slightly higher Friday morning, pushing into positive territory after futures held lower throughout much of the overnight session. The blue-chip index, however, was still on track to post a weekly decline of more than 1%, as the energy, materials and financials sectors lagged. Investors piled ack into defensive sectors over the past week, and the healthcare, utilities and consumer staples sectors outperformed.
The Dow also opened a tick above the flat line, and the Nasdaq gained. The 10-year Treasury yield was little changed to hover around 1.24%.
7:23 a.m. ET: Stock futures point to a lower open
Here’s where markets were trading ahead of the opening bell:
S&P 500 futures (ES=F): -21.25 points (-0.48%) at 4,380.25
Dow futures (YM=F): -165.00 points (-0.47%) to 35,653.00
Nasdaq futures (NQ=F): -46.00 points (-0.31%) to 14,882.00
Crude (CL=F): -$0.52 (-0.87%) to $63.17 a barrel
Gold (GC=F): +$3.90 (+0.22%) to $1,787.00 per ounce
10-year Treasury (^TNX): -1.4 bps to yield 1.233%
6:15 p.m. ET Thursday: Stock futures open slightly higher
Here’s where markets were trading Thursday evening:
S&P 500 futures (ES=F): -1.75 points (-0.04%) at 4,403.25
Dow futures (YM=F): +22 points (+0.06%) to 35,840.00
Nasdaq futures (NQ=F): +7.25 points (+0.05%) to 14,935.25
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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