The S&P 500 index was steady on the final day of the week, recovering from an early session sell-off that saw the index momentarily falling below 3900 but slipping back from session highs in the 3920s to finish the session around 3910. Sale pressure in “value” stocks in the manufacturing, commodity, and real estate sectors contributed to the S&P 500’s late decline, described by Wall Street.
The Dow fell 0.7 percent as a result of underperformance in these markets, as well as in the financial sector after the Federal Reserve reported that it will not be expanding pandemic-era supplementary leverage ratio (SLR) rules past the end of the month (meaning banks would have to retain reserve capital for their US treasury reserves from March 31), the Dow underperformed.
The Fed’s announcement caused a brief rise in US government bond yields, and some market analysts noted that higher yields are likely to benefit US bank stocks in the future. Meanwhile, Bank of America issued a market-calming statement, stating that the expiration of SLR relief would not affect its dividend plans. However, some analysts pointed out that the Fed could now impose restrictions on bank stock buybacks, citing concerns that they could stifle Treasury market activity, putting financials at risk.
Amid a more subdued US bond yield setting, the Nasdaq 100 outperformed, as tech and “growth” stocks breathed a sigh of relief. The tech-heavy index gained around 0.6 percent in the session, but has yet to recover the 13K mark. The Russell 2000 index rose 0.9 percent, while the VIX fell 0.63 points to under 21.00 as considered by Wall Street.
There wasn’t anything more in the way of other drivers. While the US State Department recently stated that the two sides were having substantive conversations, trade negotiations between the US and China seem to be going poorly, with both sides hurling public insults at each other. Meanwhile, the news out of Europe is largely gloomy, as EU officials increasingly realize that the bloc is in the grip of a third Covid-19 surge, and countries re-enter lockdown.
