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The US stock market closed at a new high on Friday, reversing the sharp drop earlier this week, as strong corporate earnings and the central bank’s continued support of the financial market eased concerns about the Coronavirus Delta variant.
The Standard & Poor’s 500 Index rose 1%, raising the index’s weekly gain to 2%, and the annual increase was more than 17%. The technology-focused Nasdaq Composite Index rose slightly more than 1%, making the index its strongest weekly gain since April.
Stoxx Europe 600 Index Worst conference of the year It fell 2.3% on Monday, rose 1.1% on Friday, and rose 1.5% this week.
This Dominance The emergence of a highly spread variant of the delta virus has helped raise concerns about a possible slowdown in global economic growth. However, these concerns are overshadowed by the optimistic guidance of most US companies and the expectation that the central bank is prepared to intervene when growth slows.
“It feels like a miniature version of the spring of 2020,” said Trevor Greetham, head of multi-asset investment at Royal London, referring to the collapse in global stock markets last year. Be reversed After the central bank promised to provide trillions of dollars worth of monetary support.
“The market now knows if there is a period of time [economic] Weak, there will be extra stimulation if necessary. ”
U.S. President Joe Biden is expected The re-appointment of Jay Powell as chairman of the Federal Reserve implied that it would not break the current central bank policy, and the European Central Bank Reiterate its commitment Maintain Eurozone interest rates at historically low levels.
FactSet’s data shows that, so far, 88% of the S&P 500 listed companies that have released the results of the second quarter of 2021 have exceeded analysts’ expectations.
Since the fundamental effects of last year’s historic economic recession flattered the company’s profits, investors have already anticipated a heavy earnings season.
“But earnings are really important,” said Philip Toews, president of the asset management company Toews Corporation. He pointed out that the fact that profits exceed expectations is crucial for holding stocks, and that stock valuations are at a relatively high level based on several indicators compared with historical averages.
“When the market is overvalued like it is now, any factors that support the rebound are considered important,” he said. “We are in a bubble, we are in [historic] Valuation, so all of this is to find a way to maintain the promise to the market. “
According to the Barclays Index, the cyclically adjusted price-earnings ratio of the S&P 500, a closely watched valuation indicator developed by economist Robert Shiller, is close to the highest level since the late Internet boom in the 1990s.
But some investors have warned that the shift to growth stocks highlights concerns about slowing economic expansion.
Small-cap stocks considered more sensitive to changes in US economic growth fell behind the broader market on Friday, with the Russell 2000 index rising 0.5%. The Dow Jones Transportation Average, the economic leaders including railroads and shipping groups, also underperformed on the last day of the trading week, rising 0.7%.
“Before the end of March, we have seen investor concerns about the slowdown continue to spread to the market,” said Patrick Palfrey, an equity strategist at Credit Suisse. “This has prompted investors to reassess the long-term potential of these value-oriented procyclical investments.”
The 10-year U.S. Treasury bond yield barely changed on Friday, at 1.28%, still close to its lowest level since February. Bond yield is inversely proportional to price.
The U.S. dollar index, which measures the U.S. dollar against major currencies, rose 0.1%. International oil benchmark Brent crude oil rose 0.4% to close at $74.10 per barrel.
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