Stock Indexes Push Higher on Strength in Technology Stocks

The S&P 500 Index ($SPX) (SPY) on Friday closed up +0.81%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.65%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +1.06%.

U.S. stock indexes on Friday settled moderately higher.  U.S stock indexes Friday morning recovered from overnight losses and pushed higher throughout the day.  Strength in technology stocks Friday propelled the overall market higher, along with dovish Fed comments.  U.S. stock index futures initially retreated in overnight trading on concern a worsening of the global pandemic will undercut economic growth and on additional Chinese regulatory threats.

Sep T-notes (ZNU21) on Friday closed down -6.5 ticks.  The 10-year T-note yield rose +1.5 bp to 1.258%.  A recovery in U.S. stock index futures Friday from overnight losses pressured T-notes throughout the day.  Losses in T-notes were limited by a fall in crude oil prices to a 3-month low, which knocked the 10-year breakeven inflation expectations rate down to a 4-week low of 2.257%.

Dovish comments on Friday from Dallas Fed President Kaplan were bullish for stocks when he said he was watching carefully for any economic impact from the delta Covid variant and might need to adjust his views on policy "somewhat" should it slow economic growth materially.

Strength in technology stocks Friday lifted the overall market. Nvidia (NVDA) on Friday closed up +5% to lead gainers in the S&P 500.  Nvidia added to its +4% rally Thursday after Benchmark & Co. assumed coverage on the stock with a buy rating and a $230 price target.  Other notable gainers included Illumina (ILMN), which closed up more than +3%, and Microsoft (MSFT) and Dexcom (DXCM), which closed up more than +2%.

Chinese listed stocks in the U.S. on Friday recovered from overnight losses and moved higher after China’s Securities Regulatory Commission said it would create conditions that push for U.S.-China cooperation on Chinese companies’ audit and supervision for the second half of this year. Pinduoduo (PDD) closed up more than +3% Friday, and JD.com (JD) and NetEase (NTES) closed up more than +2%.

Ross Stores (ROST) closed down more than -2% Friday to lead losers in the S&P 500 after it forecast Q3 EPS of 61-69 cents, well below the consensus of 94 cents, citing supply chain issues.

The worldwide spread of the delta Covid variant has forced renewed lockdowns across parts of Asia and Australia and has sparked concern about a slowdown in global growth.  The 7-day average of new U.S. Covid infections rose to a 6-1/2 month high of 141,049 on Thursday.  Also, Japan reported a record 25,156 new Covid infections on Thursday, ten times more than the daily count a month earlier.

The VIX S&P 500 Volatility Index ($VIX) on Friday fell -3.11 to 18.56, falling back sharply from Thursday’s 1-month high of 24.74.  The VIX is near the middle of the recent range bounded by the mid-July 3-month high of 25.09 and the late-June 1-1/2 year low of 14.10.