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Delta, Fed dominate economic conversation as stocks jump, oil drops

Stock MarketsAug 20, 2021 04:41PM ET
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3/3 © Reuters. An investor uses his mobile phone in front of a stock quotation board at a brokerage office in Beijing, China January 3, 2020. REUTERS/Jason Lee 2/3

By Pete Schroeder

WASHINGTON (Reuters) -Stocks recovered ground on Friday despite concerns about economic growth amid rising COVID-19 cases, which continued to take its toll on oil prices.

The Dow Jones Industrial Average ended up 0.65%, while the S&P 500 gained 0.81% and the Nasdaq Composite added 1.19%. However, all three indices ended with weekly losses following a steep mid-week sell-off after Federal Reserve meeting minutes underlined the U.S. central bank's plans to pare back stimulus by year's end.

The MSCI world equity index, which tracks shares in 45 nations, rose 0.43%.

"We are seeing a relief rally in European and U.S. assets today," said Phil Guarco, global investment specialist at J.P. Morgan Private Bank.

The Fed is likely to dominate the economic conversation next week as well with an annual meeting of central bankers at Jackson Hole, Wyoming. Markets will be watching for any clearer indication on plans for a Fed taper of monthly bond purchases, which minutes showed officials believed would happen this year if the economy recovers as expected. Fed Chairman Jerome Powell will deliver remarks on the economic outlook next Friday.

Economic uncertainty also helped boost safe-haven investments this week, although most ended Friday flat or declining. The U.S. dollar touched highs not seen in 9-1/2 months Friday before ending the day slightly down. The dollar index, which tracks the greenback versus a basket of six currencies, fell 0.13%.

Gold was up slightly, with spot gold prices climbing 0.07% to $1,781.51 an ounce. Benchmark 10-year yields rose two basis points on the day to 1.260%, but are down from 1.283% last week.

OIL'S SLIP

The concern that rising COVID-19 cases globally could handcuff travel demand continued to weigh down oil markets, which fell for the seventh straight session. Brent crude ended the week down 2.17% at $65.01 a barrel, while U.S. crude fell 2.26% at $62.25 per barrel.

Overall, oil faced its biggest week of losses in more than nine months.

Rabobank analysts said in a note they believed much of the downturn was due to systemic selling rather than a fundamental reorientation of market expectations.

"We are attributing a large portion of the recent fall in oil prices to the herd-like behavior of systematic funds rather than to any material shift in the fundamental outlook for oil markets," Ryan Fitzmaurice, Rabobank's senior commodity strategist, wrote in a note. "We expect oil balances to remain tight and for prices to stabilize and grind higher as soon as the aggressive systematic selling we have been witnessing starts to wane."

Delta, Fed dominate economic conversation as stocks jump, oil drops
 

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Comments (8)
Iyarin Boonnum
Iyarin Boonnum Aug 20, 2021 11:29PM ET
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Fed pump money to buy ETF, that's it. Time to sell stock to FED before getting stuck at the top of the roof.
Todd Gray
Todd Gray Aug 20, 2021 9:14PM ET
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stocks went up at 11:29, and down by 11:30. then they went back till 11:46. and dropped down 3 one minute candles only to continue dropping till 12:15. then they went back up again. news in minutia. what could sit around and write this stuff?
Kurt Maxberry
Kurt Maxberry Aug 20, 2021 10:27AM ET
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Just more lies. This website is a joke, they say its all bad and look the fed just feds it up
Research Scum
Research Scum Aug 20, 2021 10:25AM ET
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"dollar firm with delta" well what a good word to incite a new rumor.
Yen Cross
Yen Cross Aug 20, 2021 7:24AM ET
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Who writes this garbage. This dealer gamma squeeze, and nothing more.
Unoqueva Alguno
Unoqueva Alguno Aug 20, 2021 1:25AM ET
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it's coming....
Mike Chen
Mike Chen Aug 20, 2021 1:15AM ET
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Bubbles everywhere, who is the first one to burst? China!
Jacob Steinschlag
Jacob Steinschlag Aug 20, 2021 1:15AM ET
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China isn't in a bubble, in fact, the stock market is at a 15-year low in China.
Michael Vaynagiy
Michael Vaynagiy Aug 20, 2021 1:15AM ET
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China is most adequate market now. wait the same over other markets.
JAMES CUNHA
JAMES CUNHA Aug 20, 2021 1:15AM ET
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China's equity market is not in a bubble. Not like our asset bubble.
Jack Zydron
Jack Zydron Aug 20, 2021 12:28AM ET
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green tomorrow, shopping time
 
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