The major market indexes finished a holiday-shortened week in fine fashion, leaving behind Thursday's Treasury-rate tumult to end today at record highs.
After falling to its lowest level since February yesterday, the 10-year Treasury yield stabilized, settling up 7 basis points (one basis point is one-one hundredth of a percentage point) to 1.36%.
Also moving higher today were reopening stocks like American Airlines (AAL, +2.7%) and Carnival (CCL, +2.3%), as well as financials (+2.8%).
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The Dow Jones Industrial Average gained 1.3% to finish at 34,870 as big banks Goldman Sachs (GS, +3.6%) and JPMorgan Chase (JPM, +3.2%) surged ahead of next week's earnings reports, while the S&P 500 Index jumped 1.1% to 4,369. Even the Nasdaq Composite brushed off news of President Joe Biden's executive order aimed at promoting competition in a wide range of sectors, including technology, to finish up 1.0% at 14,701.
Other action in the stock market today:
- The small-cap Russell 2000 rose 2.2% to 2,280.
- Discover Financial Services (DFS) jumped 6.2% today. Citi upgraded the big bank stock to Buy, saying it "has the clearest near-term path to benefit from the return of consumer card spending and lending as pandemic-related benefits expire and elevated payment rates return to lower levels."
- There were a number of stocks that moved on M&A news today. Philip Morris International (PM) rose 1.1% after the tobacco titan said it was buying U.K. respiratory treatment specialist Vectura for $1.4 billion. Additionally, Stamps.com (STMP) soared 64.0% after the mailing company agreed to be taken private by Thoma Bravo in a deal valued at $6.6 billion.
- U.S. crude oil futures spiked 2.3% to $74.60 per barrel, but still fell 0.8% on the week.
- Gold futures gained 0.6% to finish at $1,810.60 an ounce. For the week, gold rose 1.5% – its third consecutive weekly win.
- The CBOE Volatility Index (VIX) plunged 14.8% to end at 16.18.
- Bitcoin added 1.3% to $33,446.99. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.
So, What's in Store for Next Week?
While the start to second-quarter earnings season will certainly be front and center, Wall Street will also be watching inflation with the latest consumer price index (CPI) due out ahead of the opening bell on Tuesday, July 13.
Last month's CPI reading rose 5% on a year-over-year basis – its biggest annual increase since August 2008. And according to Gargi Chaudhuri, head of iShares Investment Strategy, Americas at BlackRock, inflation is going to continue to run hot. This is due to several factors, including the Fed's easy money policy, higher production costs and supply bottlenecks.
However, Chaudhuri says that the rising-inflation trend bodes well for "cyclically oriented value stocks in sectors such as financials that have been strong performers so far in 2021."
For investors looking to position for higher inflation, we've recently compiled a list of top-rated financial stocks to watch for the remainder of the year. These are the most compelling plays in the space, according to Wall Street's analysts. Check them out here.
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