U.S. equities headed for all-time highs amid solid corporate earnings and confidence that the Federal Reserve will remain accommodative even as robust growth takes the world’s largest economy back to pre-pandemic levels.
The S&P 500 rose after notching its first weekly decline since mid-March. Most of the main 11 industry groups gained, with energy and financial shares jumping the most. Small-cap stocks in the Russell 2000 rallied four times as much as the broader market. The U.S. 10-year Treasury yield climbed for the second straight session, hovering hear its 50-day moving average. The dollar erased a loss. Copper, seen as a barometer of growth, surged to the highest in a decade.
Investors this week will focus on corporate earnings and U.S. economic data even as the Fed primes them to expect no change to policy at their two-day meeting ending Wednesday. While emerging economies from India to Brazil are grappling with a Covid-19 surge or renewed curbs, the developed world is on a firmer recovery path with a faster pace of vaccination.
“The Fed is going to likely reiterate their patient stance here,” said Emily Roland, co-chief investment strategist at John Hancock Investment Management. “I’m anticipating that they acknowledge the recent strength we’ve seen in economic data but they will continue to highlight we are a ways away from achieving their goal of full employment. I think they’ll continue to assure markets that Fed policy is going to remain firmly dovish for some time.”
Data Thursday may show U.S. gross domestic product increased at a 6.9% annualized pace from January through March after a more moderate 4.3% rate in the previous quarter. Other reports this week may show a pickup in consumer confidence and robust personal spending. Recent indicators cemented economic optimism, with durable-goods orders rebounding in March and output at manufacturers and service providers reaching a record high in April.
A slew of earnings from megacaps including Tesla Inc., Facebook Inc. and Apple Inc. will also be parsed this week as investors look for clues on how companies are faring in the recovery.
European stocks advanced Monday, as gains for banks and travel companies offset losses for food companies and utilities. The dollar was little changed after initially falling to a two-month low. It was still on course for the biggest monthly drop this year.
Oil retreated amid concern demand from India may fall after the nation reported a million new coronavirus cases in three days.
WATCH: “We have a negative one month and twelve month outlook on equity,” Saxo Bank says.
Here are some key events to watch this week:
These are some of the main moves in markets:
— With assistance by Cormac Mullen, Michael Msika, Andreea Papuc, and Dave Liedtka
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