The Nasdaq bounced out of correction territory on Tuesday and ended the session up more than 3% simply because US Treasury bond yields reversed direction from Monday’s rise and fell.
At one stage Nasdaq was up well over 4% but lost ground in the final half hour of trading to close the day with a gain of 3.7%.
If the small fall in 10-year bond yields to 1.53% (which was high enough to frighten investors two weeks ago) was enough to spark such a big rebound for the Nasdaq, what does that say about the lack of any overriding ’story’ on Wall Street at the moment?
Inflation is feared, bonds up is bad/good, bonds down is bad/good – and all this before the $US1.9 trillion stimulus package is passed by Congress and some significant funds flow to consumers, businesses and spending on infrastructure, schools, hospitals etc starts kicking in.
Nasdaq’s jump followed mostly solid gains for the shares of tech majors – except for Tesla where investors lost their heads again and helped produce an unexplained rise of more than 19% (or $US106 billion) as its bullish supporters took advantage of the big price fall in recent days and hopped back into the stock.
By the close on Monday Tesla shares had lost nearly a third in value and were in deep bear territory but Tuesday’s surge more than halved that loss.
Shares in Apple, Amazon and other megatechs also rose (by between 2% and more than 4%) and helped the S&P 500 to a 1.4% gain.
The Dow by way of comparison lost its recent ‘value’ rotation attraction for investors and could only manage a small gain of 0.1% which was half the gain with 10 minutes to go. That’s despite a near 4% rise for Apple shares.
Gold rose as a result regaining the $US1,700 level and moving well past it for a gain of more than 2.3% for the session (to settle at nearly $US1,717 an ounce).
Copper fell 1.8% to trade around $US4.01 a pound in early Asian dealings on Comex Wednesday morning.
Oil fell for a second session, settling down at $US64.01 a barrel for a loss of 1.6%. It fell under that level in early Asian trading. Brent also sold off to be lower in Asia as well at around $US67.25 a barrel
The US dollar eased and the Aussie dollar regained the 77 US cent level, trading around 77.20 early Wednesday in local trading.
Iron ore prices sold off heavily – the price of 62% Fe fines delivered to northern China fell $US9.93 a tonne or 5.6% to $US164.41 a tonne and the price of 65% Fe fines (from Brazil) fell $US9.10 a tonne, or more than 4.5% to $US189.30 a tonne.
The Aussie market didn’t pick up a lead from the Nasdaq’s surge and was looking for a smaller gain of around 15 points this morning, down from a 28-point gain at 7am Wednesday.
Local investors will grab the gain in gold, but the sharp fall in iron ore prices (ostensibly because of tighter pollution controls in several major steel cities) will hit the prices of BHP, Rio and Fortescue shares today.
But the Chinese market will bear watching again today. After falling into correction territory on Monday it fell in late trading to add a further drop of more than 2.1% on Tuesday, taking the CSI300 index (covering top stocks in Shanghai and Shenzhen) down more than 16% from its peak of 5,807 on February 10.
Bloomberg reported some scattered buying support from what appeared to be government funds, but investors ignored that and the index fell deeper into correction territory.
