The stock market wiped out earlier losses, with the S&P 500 extending its surge from a March 2020 low to 100%. Treasuries climbed.
The benchmark gauge of American shares closed at another record, its 49th since the end of last year, led by healthcare and utility companies. Apple Inc. also climbed to an all-time high. Equities fell in the first few hours of trading on Monday after softer economic data from the world’s two biggest economies. Tesla Inc. sank as the U.S. opened an investigation on the electric-vehicle firm’s Autopilot system.
Traders awaited signals from the Federal Reserve, with a town hall by Chair Jerome Powell Tuesday potentially acting as a precursor to the Jackson Hole symposium in late August. The market has viewed the event as a venue for the Fed to lay out the timing and contours of its expected move to taper the bond-buying program.
“The big question that’s hovering over the market is about the Fed. When the Fed is going to move when the Fed is going to taper,” said Fiona Cincotta, senior financial markets analyst at City Index. “What we do know is that the recovery is going to be bumpy; it’s not going to be in a straight line.”
Halfway through August, the S&P 500 is on track for one of the calmest months ever. Under the surface, however, there’s still a degree of anxiety about what’s coming. A measure of implied volatility in VIX options has advanced for five out of seven weeks, even as the Cboe Volatility Index kept falling.
Citigroup Inc.’s Tobias Levkovich warned that investors should be bracing for more volatility as Fed tapering, the possibility of higher taxes, margin pressures, and persistent inflation become forces “that the bond market has to respond to.”
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