Sat. Dec 4th, 2021

U.S. stocks advanced Monday, led by shares of technology and communications companies, as investors grew more comfortable with the inflation outlook and the pace of the economic recovery.

The S&P 500 climbed 0.8% in morning trading, an upbeat start to the week after the index declined for two weeks in a row. The Dow Jones Industrial Average gained 165 points, or 0.5%.

The tech-heavy Nasdaq Composite rose 1.2%.

Investors are keeping a close eye on inflation indicators to determine whether a rise in prices will be temporary or longer-term. Energy and materials companies that are able to pass along higher costs to consumers have been an increasingly popular trade, while tech companies’ shares and bonds have lagged behind.

“Inflation concerns have lessened, there’s more of a wider recognition that inflation will be transitory,” said Fahad Kamal, chief investment officer at Kleinwort Hambros. “This is reflecting the fact that we hit the fastest part of the recovery. Growth, while continuing, is going to be at a decelerating pace.”

In bond markets, the yield on the benchmark 10-year Treasury note declined to 1.620% Monday from 1.629% Friday. Yields fall when prices rise.

Cryptocurrencies continued a dramatic stretch of trading.

Bitcoin

rebounded after suddenly dropping over the weekend to nearly $30,000 and was recently trading at $37,728. But the cryptocurrency is still down more than 40% from its mid-April peak.

“Decentralized finance is facing its first real challenge since inception. We don’t think that this is the end, the bubble has not really popped yet,” said Monica Defend, global head of research at Amundi. “Central banks are ready to play in the digital currency field, I expect with the central banks in play, there will be more regulation to come and more transparency.”

Technology and communications were the strongest-performing sectors of the S&P 500 on Monday. Among the day’s stronger gainers were Google parent Alphabet, which rose 2.3%, and

Twitter,

which was up 3.4%.

Earnings season is winding down. Tech companies set to report this week include chip maker

Nvidia

on Wednesday and

Salesforce.com

and Dell Technologies on Thursday.

Vaccine maker Moderna rose 2.3% after striking a deal with

Samsung’s

biotech division to manufacture its Covid-19 vaccines in South Korea.

Virgin Galactic jumped 14% after the space-travel company said it completed its first human space flight on Saturday from New Mexico.

In commodities, global benchmark Brent crude rose 1.8% to $67.65 a barrel. Analysts at

Goldman Sachs

put out a note on Sunday with a forecast that it will reach $80 by summer.

“It’s still kind of punching in the green light for inflation flows into commodities,” said Gregory Shearer, a commodities analyst at JPMorgan. But the Federal Reserve minutes last week, “where they began to talk about tapering, this makes people somewhat less concerned about [inflation] running away out of hand.”

Overseas, the pan-continental Stoxx Europe 600 was relatively flat, wavering between small gains and losses. In Asia, major benchmarks were mixed. The Shanghai Composite Index advanced 0.3% while Hong Kong’s Hang Seng Index slipped 0.2%.

Investors are growing more comfortable with the inflation outlook.



Photo:

Courtney Crow/Associated Press

Corrections & Amplifications
The plunge in shares of Solutions 30 erased around 800 million euros, equivalent to roughly $974 million, from the IT services company’s market capitalization. An earlier version of this article miscalculated the currency conversion. (Corrected on May 24)

Write to Anna Hirtenstein at [email protected]

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