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14.05.2021 12:29 PM
US stock indices skyrocket after three-day record drop

On Thursday, at the end of the trading session, US stock indices showed a sharp rise, recouping losses after the deepest three-day decline logged for the first time since last October.

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Thus, yesterday's results were opposite to those recorded since the beginning of the week. Since early Monday, investors were seriously preoccupied by the unprecedented rise in the US inflation. This, in turn, put pressure on the quotes of the most expensive market segments.

Moreover, statistical data unveiled a jump of 4.2% in consumer prices in April compared to the same period in 2020. What is more, producer prices showed the most significant growth since 2010 when the record began.

The gravest concerns are caused by a possible decline in corporate profit margins and a stronger likelihood that the US Fed will switch to a tighter monetary policy. However, on Wednesday, one of the Fed's representatives said that the regulator would need much more time and data to take such a decision.

At the same time, on Thursday, the Dow Jones Industrial Average closed with a rise of 1.3% to 34,021.45 points. The S&P 500 advanced by 1.2% to settle at 4,112.50 points, whereas Nasdaq Composite inched up by 0.7% to 13,124.99 points.

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Tech companies showed the best performance. Notably, at the beginning of the week, they were among the main losers. Thus, shares of Facebook grew by 0.9% and shares of Alphabet climbed by 1.3%.

Shares of McDonald's mounted by 0.9% following the announcement made by the company's representatives. It was said that during the following months, the salary of more than 36 thousand employees with hourly wages would increase by an average of 10%.

Curiously, yesterday, most investors benefited from the market collapse and bought stocks of tech giants. For most market participants this was a long-awaited opportunity to buy expensive shares with a significant discount.

A report published by the US Labor Department became a new sign of the economic imbalance. Thus, the number of unemployment claims decreased to a new low since the pandemic broke out. In general, the number of claims has slumped in recent months. However, the reading is still twice higher than before the pandemic.

At the same time, the US bonds market has recovered after a four-day sell-off. Thus, on Thursday, yield on the 10-year bonds declined to 1.666% from 1.693% logged on Wednesday.

Commodity market also showed a negative dynamic. WTI futures lost 3.4% to trade at $63.82 per barrel. Experts suppose that the drop in oil prices was caused by the resumption of Colonial Pipeline operation. Colonial Pipeline Co., the largest pipeline system, which is the main source of supply of gasoline as well as diesel and jet fuel to the east coast of America. The company had to suspend its work because of a hacker attack.

ATP stock markets also collapsed following the US markets. Hang Seng dropped by 1.8%. Indicators from South Korea, Japan, and Australia also sank. Taiwan's Taiex lost as much as 1.5%. Over the past three days, this index was also trading in the red.

Irina Maksimova,
Experto analítico de InstaForex
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