Investing.com – Top 5 things that rocked U.S. markets this week
1. Tech Earnings, Bond Yields Take Centre Stage
The busiest week of the U.S. corporate earnings season was upstaged somewhat by a surge in bond yields, which sparked investor concerns.
The 10Y US Treasury yield rose to a more than four-year high above 3% this week before retreating, raising investor questions about whether a rotation of some portfolio positions from equities to bonds would be warranted.
But stunning quarterly earnings from some of the mega cap tech names supported sentiment as Amazon, Facebook (NASDAQ:FB), Intel (NASDAQ:INTC) and Microsoft (NASDAQ:MSFT) topped estimates.
Amazon was the pick of bunch, delivering a blowout earnings report, which beat on both the top and bottom lines. A slew of analysts upgraded their outlook on Amazon as the tech giant confirmed it would raise the price of its prime membership.
Shares of Amazon.com Inc (NASDAQ:AMZN) hit an all-time intraday high of $1,638.10 on Friday but retreated to closed at $1,572.62, up 3.60%, amid a broader stock market selloff as investors mulled softer first-quarter economic growth.
The Commerce Department Friday released its preliminary reading of first-quarter gross domestic product showing the U.S. economy expanded at a 2.3% annual rate as consumer spending slumped.
The NASDAQ closed roughly flat for the week at 7,119.80.
2. Crude Oil Prices Snap 2-Week Winning Streak
Crude oil prices settled lower on Friday, snapping a two-week winning streak but sentiment on oil prices remained mostly positive amid renewed investor expectations the U.S. is set to pull out of the Iranian nuclear deal.
If Trump does scrap the deal, it could lead to the re-imposition of secondary sanctions on Iran, pressuring countries to cut their purchases of Iranian crude, denting global supplies.
“We so not see the deal surviving past summer given the constellation of domestic and foreign forces aligned against it,” RBC said on Friday.
U.S. weekly crude supply totals also surprised investors after the Energy Information Administration reported Wednesday an unexpected build in crude supplies.
Yet, that was offset somewhat by a sharp uptick in crude exports to 2.331 million barrels last week, up more than 30% from 1.749 million barrels the prior week.
On Friday U.S. crude futures fell 9 cents higher at 68.10.
3. Dollar Extends Rally
The dollar picked up from where it left off last week, posting a second weekly win buoyed by rising bond yields and steep declines in both the pound and euro.
The U.S. 10Y treasury yield rose to a more than four year high this week above a key 3% level as traders bet that both inflation and economic growth would continue to warrant further rate hikes.
GBP/USD declined sharply on Friday to a low of $1.3748 as the pair recorded its second weekly loss in a row after UK GDP unexpectedly slumped in the first quarter.
Weakness in EUR/USD came on the back of European Central Bank President Mario Draghi's somewhat mixed message on the Eurozone economy on Thursday.
Draghi admitted that the pace of the Eurozone recovery had moderated broadly across all countries but reaffirmed his confidence that inflation would eventually hit the bank’s target.
The dollar traded roughly flat against a basket of major currencies on Friday.
4. Gold Prices Struggle to Recover
Gold prices rose on Friday but ultimately added to last week’s losses as sharp rallies in both the dollar and bond yields limited upside momentum.
Easing geopolitical uncertainty also kept a lid on a possible recovery in gold prices amid signs of progress toward peace talks on the Korean peninsula and improving U.S.-China relations.
The leaders of North and South Korea on Friday pledged to an end the Korean War and complete denuclearization of the Korean Peninsula as they met for a historic one-day summit.
5. Bitcoin: Return of the Hodlers?
Bitcoin was set to post its third weekly rise in a row for the first time since December as weakness seen during the week attracted a wave of buying pressure amid improved sentiment on cryptos.
Bitcoin rose to highs of $9,761 on Wednesday before retreating to a low of $8,656 as some suggested that the move close to $10,000 triggered technical resistance - trading levels that attract sellers.
Upbeat sentiment on bitcoin comes amid easing regulatory worries and the end of “tax selling,” leading some to suggest the Bitcoin rally is far from over.
“After fighting regulation headwinds and tax selling, the path of least resistance is higher, and I believe the sector still has much more upside in the long run,” President of Blue Line Futures Baruch told CNBC earlier this week.
Some crypto observers pointed to the rally in lesser known “altcoins” as a sign of renewed demand for cryptocurrencies.
EOS/USD, an altcoin linked to an innovative platform for decentralized applications, surged 56.75% over the past seven days, surpassing Litecoin as the fifth most valuable cypto by market cap.
Over the past seven days, Bitcoin rose 7.09% on the Bitfinex exchange, Ethereum rose 12.50%, while Ripple XRP fell 4.73% on the Poloniex exchange.