Stocks soar on vaccine optimism—but tech names falter


U.S. equities rose alongside European stocks as the nearly relentless rally in risk assets continued, but with a twist as tech shares underperformed.

The S&P 500 jumped the most in almost two months to an all-time high, with some of this year’s least-loved shares helping fuel the rally. The Russell 1000 Value Index rose 1.7%, beating its growth counterpart. Utilities and financial stocks — two of the three worst performing sectors in 2020 — each rose more than 1.4%. The Stoxx Europe 600 Index added the most in three weeks.

The dollar rose the most in almost two weeks as the euro slid further below $1.20, a level it breached for the first time in more than two years Tuesday. Oil fell with precious metals and Treasury yields dipped.

The rally in global stocks has pushed major indexes to record highs as traders bet that a flood of liquidity unleashed by central banks will make its way to equity markets. The rotation away from the tech titans that have led gains this year — with Apple, Tesla and Zoom Video all slumping Wednesday — could signal confidence in a broader economic recovery from the pandemic and a possible vaccine.

“We’ve seen all the major central banks stay very accommodative,” said Chris Gaffney, president of world markets at TIAA Bank. “Negative real yields across the globe are almost forcing people into finding investments that have a potential for gain.”

Amid the risk-on rally, key U.S. markets now appear to be pricing in chances of a delayed or inconclusive result from the November presidential election, JPMorgan Chase & Co. analysts said.

Elsewhere, 10-year bunds rose along with most of their sovereign peers across Europe, benefiting Germany, which took in 33 billion euros ($39 billion) of orders for its first green bonds.

Here are some key events to watch this week:

  • U.S. jobless claims for the week ended Aug. 29 are due Thursday.
  • Eurozone retail sales data for the month of July to be released on Thursday.
  • U.S. jobs report Friday is forecast to show payrolls continued to rebound in August from virus lows.

Here are the main market moves:

Stocks

  • The S&P 500 Index gained 1.5% as of 4 p.m. New York time.
  • The Stoxx Europe 600 Index jumped 1.7%.
  • The MSCI AC Asia Pacific Index increased 0.2%.

Currencies

  • The Bloomberg Dollar Spot Index gained 0.3%.
  • The euro fell 0.6% to $1.1842.
  • The Japanese yen fell 0.2% to 106.21 per dollar.

Bonds

  • The yield on 10-year Treasuries fell two basis points to 0.65%.
  • Germany’s 10-year yield sank six basis points to -0.48%.
  • Britain’s 10-year yield decreased six basis points to 0.23%.

Commodities

  • West Texas Intermediate crude fell 2.8% to $41.56 a barrel.
  • Gold declined 1.4% to $1,942.76 an ounce.
  • Silver decreased 2.4% to $27.45 per ounce.

–With assistance from Adam Haigh, Olivia Konotey-Ahulu, Todd White and Kamaron Leach.

More must-read finance coverage from Fortune:

  • Investors are pouring record amounts into Wall Street’s new favorite “safe haven”
  • First he took energy trading and the NYSE electronic. Now Jeff Sprecher of ICE shares his plans to digitize your mortgage
  • The bizarre reason Amazon drivers are hanging phones in trees near Whole Foods
  • The humbling of Europe’s most-hyped startup incubator: Rocket Internet
  • Fortune’s 2020 40 Under 40

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