S&P 500 Snaps 2-Week Losing Streak as Dip Buying Fuels Tech Comeback By Investing.com


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By Yasin Ebrahim

Investing.com – The S&P 500 snapped its two-week losing streak Friday, on strong jobs data and a rebound in tech as bargain-hunting investors swooped in to take advantage of the recent rout that pushed stocks to oversold levels. 

The rose 1.95%, rose 1.85%, or 572 points, and the rose 1.55%, and had been down more than 2% intraday.

The U.S. economy created  jobs last month, well above economists’ consensus forecast of 182,000, with the unemployment rate falling to 6.2% from 6.3%, underpinned by easing Covid-19 restrictions and a ramp-up in vaccine distribution. 

“While one report does not make a trend and payroll data are certainly volatile, it’s safe to conclude that the winter soft patch is now officially over,” Jefferies (NYSE:) said in a note.

The robust jobs data initially pushed sharply higher, souring the outlook for the high-flying tech stocks, but investors swooped in buy the dip helping the sector move off intraday lows.

Apple (NASDAQ:), Microsoft (NASDAQ:), Amazon.com (NASDAQ:), while Alphabet (NASDAQ:) and Facebook (NASDAQ:) moved off their lows of the day.

The dip buying comes after a rout in tech earlier this week that pushed the broader market into oversold territory.

“The short-term trading charts on the SPX are now oversold after this most recent decline- so we would suspect some stabilization or a potential oversold rally to materialize,” Janney Montgomery Scott said in a note. For a sustained move higher, the S&P 500 now needs “to clear 3900 initial resistance,” but below this level, further volatility is likely to occur.”

Cyclical stocks – those that move in tandem with the economy – were buoyed by signs of a faster recovery, with energy stocks leading to the upside amid rising oil prices.

Oil prices added to their gains from Thursday, when OPEC and its allies decided to keep output steady, prompting economists to up their forecasts on energy prices amid an ongoing tightening in global supplies.

Goldman Sachs (NYSE:) raised its forecast on by $5 per barrel to $75/bbl in 2Q and $80/bbl in 3Q21.

“We believe it is now clear that OPEC+ is in fact pursuing a tight oil market strategy, with our updated supply-demand balance pointing to OECD falling to their lowest level since 2014 by the end of this year,” Goldman Sachs said in a note.

Still, the faster pace of vaccine rollouts and ongoing reopening will boost inflation and likely take rates along for the ride, potentially muddying the road ahead for growth stocks.

“Well inflation in the reopening sensitive sectors is likely to prove transient, a more sustainable impulse to inflation will start to take shape in 2021, led by shelter inflation healthcare services, and a multi quarter past true of dollar weakness into goods,” Morgan Stanley (NYSE:) said.  

In other news, Imax (NYSE:) jumped 19% after its upgraded outlook on performance for 2021 offset mixed fourth quarter results.