North American stocks ended sharply higher after a volatile session on Friday, with the Nasdaq rebounding at the end of a week that saw it extend losses to about 10% from its previous record high.
All of the main indexes bounced back from losses earlier in the day, with investors in recent sessions spooked by rising interest rates that offset optimism about an economic rebound.
Canada’s benchmark index gained 1.41%, with another big boost in the price of oil propelling the energy sector 3.4% higher. It was a broad advance, however, with even the tech sector closing slightly in the green; Shopify closed down 1.6% after being down more than 10% in morning trade. The S&P/TSX Composite Index gained 255.24 points to 18,380.96. For the week, the TSX gained 1.7%. It’s now just a little over 100 points away from its record high set last month.
The benchmark 10-year U.S. Treasury yield hit a new one-year high of 1.626% after nonfarm payrolls increased by 379,000 jobs last month, blowing past a rise of 182,000 forecast by economists polled by Reuters. However, it later drifted back down below 1.6%. Canada’s 10-year government bond yield also touched its highest point in more than a year before easing back to roughly unchanged for the day.
Oil prices jumped about 3%, hitting their highest levels in more than a year, following the stronger-than-expected U.S. jobs report and a decision by OPEC and its allies not to increase supply in April.
Brent futures rose $2.62, or 3.9%, to settle at $69.36 a barrel. The session high for the global benchmark was its highest since January 2020. U.S. West Texas Intermediate (WTI) crude rose $2.26, or 3.5% to settle at $66.09 a barrel.
For the week, Brent was up 5.2%, rising for a seventh week in a row for the first time since December, while WTI was up about 7.4% after gaining almost 4% last week.
Both contracts surged more than 4% on Thursday after the Organization of the Petroleum Exporting Countries and allies, together known as OPEC+, extended oil output curbs into April, granting small exemptions to Russia and Kazakhstan.
Investors were surprised that Saudi Arabia had decided to maintain its voluntary cut of 1 million bpd through April even after the oil price rally of the past two months on the back of COVID-19 vaccination programs around the globe.
Some forecasters revised their price expectations upward following the OPEC+ decision. Goldman Sachs raised its Brent crude price forecast by $5 to $75 a barrel in the second quarter and $80 a barrel in the third quarter of this year. UBS raised its Brent forecast to $75 a barrel and WTI to $72 in the second half of 2021.
On Wall Street, Microsoft rallied 2.15%, boosting the S&P 500 more than any other stock, with gains in Alphabet, Apple and Oracle also lifting the index.
Focus is on a $1.9 trillion coronavirus aid bill as a sharply divided U.S. Senate began what was expected to be a long debate over a slew of amendments on how that money would be spent.
The Nasdaq logged its third straight weekly decline after a recent spike in Treasury yields dented demand for high-flying technology stocks.
Rising interest rates disproportionately hurt high-growth tech companies because investors value them based on earnings expected years into the future, and high interest rates hurt the value of future earnings more than the value of earnings made in the short term.
The tech-heavy Nasdaq is around 8% below its Feb. 12 closing high.
Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma, said his firm in recent days has bought shares in a handful of growth companies whose prices have been pummeled in the recent selloff.
“Next week, I would expect volatility to continue, with pockets of opportunity, with certain things that sold off potentially rebounding,” Dollarhide said.
The Dow Jones Industrial Average rose 1.85% to end at 31,496.3 points, while the S&P 500 gained 1.95% to 3,841.94.
The Nasdaq Composite climbed 1.55% to 12,920.15.
In a busy session, volume on U.S. exchanges was 17.4 billion shares, compared with the 15.3 billion average for the full session over the last 20 trading days.
For the week, the S&P 500 rose 0.8%, the Dow added 1.8% and the Nasdaq lost 2.1%.
In Friday’s session, the S&P 500 energy sector index surged 3.9% to over a one year high as oil prices soared.
The April gold contract was down US$2.20 at US$1,698.50 an ounce and the May copper contract was up 9.7 cents at nearly US$4.08 a pound.
Advancing issues outnumbered declining ones on the NYSE by a 2.86-to-1 ratio; on Nasdaq, a 2.12-to-1 ratio favored advancers.
The S&P 500 posted 55 new 52-week highs and no new lows; the Nasdaq Composite recorded 225 new highs and 134 new lows.
Read more: Stocks that saw action Friday - and why
With files from Reuters
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