NEW YORK: A gauge of global stocks climbed for a third straight session on Thursday to hit its highest level in two weeks, as a dip in government bond yields helped ease inflation worries and provided a boost to equities.
Euro zone bond yields fell after the European Central Bank said it was ready to accelerate money-printing to keep a lid on euro zone borrowing costs, using its 1.85 trillion euro Pandemic Emergency Purchase Program (PEPP) more generously over the coming months to stop any unwarranted rise in debt financing costs.
Germany’s 10-year government bond yield was last unchanged at -0.333%, after falling as far as -0.367%, the lowest level since Feb. 18 and further away from the near one-year high of -0.203% in late February.
The Yield on the benchmark 10-year Treasury note fell as low as 1.475%, the first time it had dipped below 1.5% in a week. It was last at 1.5213%.
On Wall Street, the easing inflation worry helped support equities, with the highly valued technology sector leading the way higher, up 2.40%. Expensive stocks, many of which are in the tech sector, have been highly sensitive to the rise in yields.
In contrast, shares of bank stocks lost 0.25%.
“The rates pulling in, as modest as the pull in has been, is a big stimulus for the market,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
“For now, things are good. Yeah, there is a question of leadership between growth and value but I don’t think either one is going to fall far behind the other in this environment and we see that with this back and forth.”
The Dow Jones Industrial Average rose 292.27 points, or 0.9%, to 32,589.29, the S&P 500 gained 53.17 points, or 1.36%, to 3,951.98 and the Nasdaq Composite added 339.40 points, or 2.6%, to 13,408.23.
Sentiment was also boosted by weekly jobless claims data, which pointed to a recovering U.S. labor market as vaccine rollouts have helped lead to economic reopenings.
European stocks climbed, with the pan-European STOXX 600 higher for a fourth straight day, its longest winning streak in five weeks, with the index closing at its highest level since Feb. 21, 2020. The STOXX 600 index rose 0.49% and MSCI’s gauge of stocks across the globe gained 1.52%.
An auction of 30-year U.S. debt on Thursday was viewed as slightly weak, but nowhere near the disappointing seven-year auction in late February that helped fuel inflation concerns and sent yields higher.
Analysts largely expect inflation to pick up as vaccine rollouts lead to a reopening of the economy, but worries persist that additional stimulus in the form of a $1.9 trillion coronavirus relief package set to be signed by U.S. President Joe Biden could overheat the economy.
The dollar was weaker for a third straight day coming off a 3-1/2 month high of 92.506. The dollar index fell 0.415%, with the euro up 0.49% to $1.1984.
Oil prices resumed their climb following two days of declines, buoyed by the brightening economic outlook and a decline in the dollar.
U.S. crude rose 2.25% to $65.89 per barrel and Brent was at $69.52, up 2.39% on the day.
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