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Apr 6, 2021

Stocks decline in slowest trading day of this year

BNN Bloomberg's closing bell market update: April 6, 2021

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Stocks dropped in the slowest trading day of 2021 after a rally that drove the equity market to all-time highs. Treasuries climbed.

Volume on U.S. exchanges slipped below 10 billion shares for the first time this year. Tech companies led losses in the S&P 500 on Tuesday, offsetting gains in retailers. The Dow Jones Industrial Average and the Nasdaq 100 also retreated. Stocks tied to the Archegos Capital Management blowup ended the session higher as investors brushed news that Credit Suisse Group AG unloaded more than US$2 billion of the shares in the latest block trades stemming from the liquidation of Bill Hwang’s fund.

Trading has slowed in recent days as investors grappling with wild rotations awaited the start of the earnings season. Traders bought stocks in record amounts in the first quarter of 2021 as a combination of generous stimulus and bets on an economic recovery drove US$372 billion into global equity funds, according to Bank of America Corp. strategists. The data confirm the bullish market sentiment that has pushed shares to fresh highs, with optimism over vaccination efforts outweighing concern that higher bond yields can interfere with the rally.

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“Stocks’ momentum is strong, no doubt about that,” said Lindsey Bell, chief investment strategist at Ally Invest. “But the market may be ready to take a breather as investors digest all the good news, determine how much of that is priced in and weigh it against uncertain risks like inflation.”

On the economic front, data showed U.S. job openings rose to a two-year high in February, led by gains in some of the industries hardest hit during the pandemic. The International Monetary Fund upgraded its global growth forecast for the second time in three months, while warning about a divergence between advanced and lesser-developed nations.

Some key events to watch this week:

  • The 2021 Spring Meetings of the IMF and the World Bank Group take place virtually. Federal Reserve Chairman Jerome Powell takes part in a panel about the global economy on Thursday.
  • The Fed publishes minutes from its March meeting on Wednesday.
  • Japan releases its balance of payments numbers Thursday.
  • China’s consumer and producer prices data are due Friday.

These are some of the main moves in markets:

Stocks

  • The S&P 500 fell 0.1 per cent as of 4 p.m. New York time.
  • The Stoxx Europe 600 Index advanced 0.7 per cent.
  • The MSCI Asia Pacific Index gained 0.1 per cent.

Currencies

  • The Bloomberg Dollar Spot Index fell 0.2 per cent.
  • The euro increased 0.5 per cent to US$1.1875.
  • The Japanese yen appreciated 0.4 per cent to 109.79 per dollar.

Bonds

  • The yield on two-year Treasuries declined one basis point to 0.16 per cent.
  • The yield on 10-year Treasuries decreased five basis points to 1.65 per cent.
  • The yield on 30-year Treasuries fell three basis points to 2.32 per cent.

Commodities

  • West Texas Intermediate crude climbed 1.3 per cent to US$59.43 a barrel.
  • Gold rose 0.9 per cent to US$1,743.63 an ounce.

--With assistance from Andreea Papuc, Joanna Ossinger, Robert Brand, Kamaron Leach, Claire Ballentine, Vildana Hajric and Olivia Raimonde.

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