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Stocks Bounce Back as Oil Prices and Bond Yields Stall

Strategic Insights

— 2 min read

US stocks experienced a relief rally this week as two persistent concerns, high oil prices and bond yields, began to stabilize. Bond yields, which had peaked at 4.75 per cent, settled at 4.66 per cent, while oil prices dropped below $40 a barrel, sparking a buying frenzy in equities. Strong earnings reports and the removal of two major concerns pushed stocks higher, with the Dow Jones Industrial Average up 2.2 per cent on the week and the S&P 500 gaining 2.5 per cent.

Key Takeaways:

  • The Dow Jones Industrial Average was down 0.2 per cent to 10,188.45, leaving it up 2.2 per cent on the week.
  • The S&P 500 slid 0.1 per cent to 1,120.64, notching gains of 2.5 per cent for the week.
  • The Nasdaq added 0.1 per cent to 1,986.74, leaving it 3.9 per cent stronger on the week.
  • Chipmakers were among the week's biggest winners, with the S&P 500 semiconductor group up 5.2 per cent.
  • Reports of strengthening demand from business customers also helped drive share prices higher.
  • Retailers were among the week's top gainers, thanks to a robust crop of quarterly earnings, with the S&P 500 retailing index up 4.7 per cent.
  • Materials producers continued to ride the wave of relief following news that China would hold off taking steps to slow its red-hot economy.
  • Analysts said that the stocks had been oversold due to fears of sharp price drops when China begins to slow its economy.

Statistics:

  • The Dow Jones Industrial Average was down 0.2 per cent to 10,188.45, leaving a gain of 2.2 per cent on the week.
  • The S&P 500 slid 0.1 per cent to 1,120.64, with a gain of 2.5 per cent for the week.
  • The Nasdaq added 0.1 per cent to 1,986.74, with a gain of 3.9 per cent on the week.
  • Bond yields settled at 4.66 per cent, off highs of 4.75 per cent.
  • Oil prices dropped below $40 a barrel on Thursday.
  • The S&P 500 semiconductor group was up 5.2 per cent.
  • The S&P 500 retailing index was up 4.7 per cent.

Sources:

  • "US Stocks Rise as Bond Yields and Oil Prices Ease" by Elizabeth Wine, New York (no date)
  • Jefferies & Co. (no date)
  • Barron's (no date)
  • Applied Micro Circuits (no date)
  • Novellus Systems (no date)
  • PMC-Sierra (no date)
  • Dollar General (no date)
  • Costco Wholesale (no date)
  • Allegheny Technologies (no date)
  • Phelps Dodge (no date)
  • US Steel (no date)
  • Alcoa (no date)

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