The Week In Review

3/5/21

The major averages roared back from a sharp sell-off on Friday as a rally in bond yields eased, while a stronger-than-expected jobs report boosted optimism for a faster economic recovery. The Dow Jones Industrial Average climbed 572 points, or 1.9%, to 31,490 after losing as much as 150 points. The S&P 500 ended the wild session 2% higher at 3,841 after shedding 1% earlier. The Nasdaq Composite advanced 1.6% to 12,920 as Apple climbed 1% and Microsoft gained 2%. At its low of the day, the tech-heavy benchmark dropped 2.6%.

The major averages bounced off their lows as bond yields retreated from their session highs. The 10-year Treasury yield eased back to 1.55% after popping above 1.6% to touch a 2021 high following data showing a surge in jobs growth.

The Labor Department on Friday reported that nonfarm payrolls jumped by 379,000 for the month and the unemployment rate fell to 6.2%. That compared to expectations of 210,000 new jobs and the jobless rate to hold steady from the 6.3% rate in January, according to Dow Jones.

Stocks that would benefit from a rapid economic comeback jumped in the wake of the jobs report. The S&P 500 energy sector popped 3.9%, posting its best day since November. Occidental Petroleum jumped 4.5%, while Devon Energy rallied 8.4%. Financials and materials rose more than 2% each.

Still, the spike in interest rates fueled fears that growth-oriented tech companies, which had led the market rally last year, may have a hard time living up to expectations if borrowing costs jump. Tesla tumbled more than 4%, bringing its weekly losses to 12%. Pandemic winners Peloton and Zoom Video have slid 19% and 14%, respectively, this week. Red-hot investor Cathie Wood, who focuses on innovative companies, saw her flagship fund lose double digits this week and wipe out its 2021 gains.

The Nasdaq fell more than 2% this week, and the tech-heavy benchmark briefly turned negative on the year. The S&P 500 gained 0.8% this week, snapping a two-week losing streak. The blue-chip Dow outperformed with a 1.8% weekly gain.

Friday's moves followed a steep sell-off on Thursday triggered by Federal Reserve Chair Jerome Powell's remarks on rising bond yields. The Fed chair said the recent runup caught his attention but he didn't give any indication of how the central bank would rein it in. Some investors had expected Powell to signal his willingness to adjust the Fed's asset purchase program.

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