Technology shares pared back a potential rebound on Friday while Treasuries rose and the yen weakened on speculation the Bank of Japan won’t make any changes to its yield curve control program.
(Bloomberg) — Technology shares pared back a potential rebound on Friday while Treasuries rose and the yen weakened on speculation the Bank of Japan won’t make any changes to its yield curve control program.
The Nasdaq 100 was little changed in midday trading, following earlier gains attempting to claw back losses in the previous session following disappointing earnings from Tesla Inc. and Netflix Inc.
The yield on the 10-year note fell three basis points, bringing its weekly losses to less than one point. American Express Co. fell 3.7% after missing revenue forecasts. Meanwhile, the yen tumbled as much as 1.4% and led losses among Group-of-10 currencies. Traders said there’s less of a chance for a hawkish surprise at the BOJ’s policy decision next week as Bloomberg reported that officials see little urgent need to address the side effects of its yield curve control at this point.
Read more: BOJ Is Said to See Little Need to Act on Yield Control for Now
Investors are braced for a volatile session on Friday, with a flood of options expiring before an out-of-cycle rebalancing in the Nasdaq 100. The index shuffle, which takes effect on Monday, is designed to reduce the dominance of megacaps and boost the presence of smaller members.
In equities, the main focus continues to be whether the rally in a handful of megacap stocks and hype over artificial intelligence has staying power. The S&P 500 has already surpassed most estimates for where it would end the year, confounding strategists convinced that 2023 would be another bad year for markets heading into recession.
“So where we are right now, we are resting after the massive move over the course of many weeks,” Ken Mahoney, CEO of Mahoney Asset Management, wrote in a note. “A lot of stocks were creating and still are creating bases to break out higher from. No one could believe their eyes after being so conditioned to 2022’s nasty selling conditions when this market gained steam again.”
Stocks slipped on Thursday for the first time this week as fresh signs of labor-market resiliency bolstered the case for another interest rate hike this year after the Federal Reserve’s meeting next week. Underscoring the risk-off mood, investors withdrew $2.1 billion from equity funds in the week to July 19, while adding $7.5 billion to money markets and $1.4 billion to bond funds, according to a Bank of America Corp. note citing EPFR Global data.
In commodities, wheat futures fell as much as 3.6% as Ukraine made preparations to continue a grain-export deal, which Russia exited this week. Oil headed for a fourth weekly gain amid tentative signs that global markets are tightening. And gold slipped against a stronger dollar on Friday, paring gains made earlier in the week.
Up next, investors will be focused on earnings from Alphabet Inc., Exxon Mobil Corp., Meta Platforms Inc. and Microsoft Corp., all reporting next week.
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.4% as of 11:52 a.m. New York time
- The Nasdaq 100 rose 0.2%
- The Dow Jones Industrial Average rose 0.3%
- The Stoxx Europe 600 rose 0.3%
- The MSCI World index fell 0.6%
Currencies
- The Bloomberg Dollar Spot Index rose 0.3%
- The euro was little changed at $1.1121
- The British pound fell 0.1% to $1.2855
- The Japanese yen fell 1.2% to 141.70 per dollar
Cryptocurrencies
- Bitcoin rose 0.5% to $29,880.24
- Ether rose 0.2% to $1,892.28
Bonds
- The yield on 10-year Treasuries declined three basis points to 3.82%
- Germany’s 10-year yield declined three basis points to 2.46%
- Britain’s 10-year yield was little changed at 4.27%
Commodities
- West Texas Intermediate crude rose 1.4% to $76.73 a barrel
- Gold futures fell 0.3% to $2,002.80 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Lu Wang and Krystof Chamonikolas.
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