Stocks Approach Bull Market as Tech Gains | World Affairs

The S&P 500 moved further into bull market territory on Friday as technology stocks continued to rise amid bets that the Federal Reserve is nearing the end of its hike cycle.

The benchmark index added 0.1%, while tech and megacap stocks delivered another session of gains, with Tesla up 4.1% after General Motors announced it was joining the company’s charging network. Netflix rose 2.6% based on a report it added US subscribers after a crackdown on password sharing. And Adobe gained another 3.4% amid the frenzy in AI-related stocks.

The S&P 500 has now surpassed a 20% gain from an October low, a common indicator of a bull market, following a rise in technology stocks. However, analysts have warned that the rally could slow down ahead of next week’s interest rate decisions by the Fed and European Central Bank. Unexpected hikes from two central banks this week have led to speculation that policymakers may need to keep rates high for longer. Meanwhile, US data pointing to a cooling labor market supports the consensus that the Fed is likely to pause.

“We’ve gotten a little uncomfortable with the technology trading,” Stuart Kaiser, head of U.S. equity trading strategy at Citigroup, told Bloomberg TV. “There is a scarcity of growth in the market and the market is willing to pay a premium for that scarcity of growth.” But the debate for investors is what could turn the market rally “into something that might be a little more sustainable and sustainable.”

Solita Marcelli, chief investment officer Americas at UBS Global Wealth Management, also cautioned against assuming that the recent rally in stocks could gain momentum.

“While many investors believe that passing this milestone will move markets into bull territory, it remains possible that we are seeing a bear market rally — a period of strong gains occurring in the middle of a bear market,” she said. “Until markets hit a new all-time high, it’s impossible to know if the bear market trough — the ultimate trough of the market cycle — is behind us.”

Elsewhere, government bond yields rose following disappointing employment data from Canada. The country’s economy ended its eight-month streak of employment growth with a small job loss in May, signaling weakness in the labor market.

Currently, swap traders are counting on about a one-third chance of a Fed hike next week, and a nearly 90% chance of a rate hike in July following an unexpected rate hike by the central banks of Canada and Australia this week.

In Europe, shares fell slightly after Croda International’s gloomy outlook weighed on chemical stocks.

Japan’s Nikkei 225 closed a ninth week in gains, up 2.4% for its longest streak in more than five years.

And in currency, the Turkish lira extended its decline to an all-time low against the dollar, pushing its weekly decline to 10%. President Recep Tayyip Erdogan completed key appointments of the economy team, which is expected to move to more conventional policies.

Shares

• The S&P 500 was up 0.1% as of 4:02 p.m. New York time.
• The Nasdaq 100 rose 0.3%.
• The Dow Jones Industrial Average rose 0.1%.
• The MSCI World Index rose 0.5%.

Currencies

• The Bloomberg Dollar Spot Index had changed little.
• The euro fell 0.3% to $1.0746.
• The British pound rose 0.2% to $1.2581.
• The Japanese yen fell 0.4% to 139.42 per dollar.

Cryptocurrencies

• Bitcoin fell 0.8% to $26,421.5.
• Ether fell 1.2% to USD 1,830.94.

Bonds

• The 10-year Treasury yield rose two basis points to 3.74%.
• The German 10-year yield fell by three basis points to 2.38%.
• The UK 10-year yield was little changed at 4.24%.

Raw materials

• West Texas Intermediate crude fell 1.4% to $70.32 a barrel.
• Gold futures fell 0.2% to $1,975.20 an ounce.

This story was created with the help of Bloomberg Automation.Bloomberg’s Namitha Jagadeesh, David Watkins, Rob Verdonck, Richard Henderson, Michael Msika and Lynn Thomasson contributed to this report.