Dow closes above 35,000 for first time
The Dow closed 0.7%, or 238 points, higher last Friday (23), finishing above 35,000 for the first time ever. The S&P and the Nasdaq both climbed 1%.
Yesterday (25), the market was deep in the red and the Dow (INDU) recorded its worst day since last October. The S&P 500 (SPX) and the Nasdaq Composite (COMP) logged their worst performances since May.
Investors, fearful that rising Covid-19 cases and the more infectious Delta variant would stifle the economic recovery, retreated from stocks and fled to the relative safety of government bonds.
“Although the variant has punctured the ‘vaccine euphoria’ that was prevalent in the market several months ago, investors seem convinced that economies will continue to open up gradually despite the new variant,” said BDSwiss Group Head of Investment Research Marshall Gittler in a note to clients.
And indeed, the market worked on recovering from Monday’s steep losses for the rest of the week. But this doesn’t mean the Delta concerns are entirely shrugged off. The rising cases could mean prolonged disruptions for already strained supply chains.
Over the past few weeks, bond yields tumbled as investors poured into the safe haven investments. On Friday, as stocks headed higher, the 10-year US Treasury yield was at 1.28% around the stock market close on Friday. Bond yields and prices move inversely to each other.
Economic data was mixed Friday. A preliminary reading of IHS Markit’s July purchasing managers’ index (PMI) showed manufacturing at a record high for the data series, beating economists’ expectations.
But it didn’t look as good on the services front; the advance services PMI underperformed expectations and dropped to a five-month low.