U.S. Stocks Rise as Tech Rebounds; Gold Gains, Dollar Declines
San Francisco (Apr 8) U.S. stocks rose, with the Nasdaq 100 Index rebounding from its worst three-day drop since 2011, as technology shares rallied. Gold climbed as a weaker dollar and tension in Ukraine prompted haven demand.
The Nasdaq 100 index of mostly technology stocks rose 0.8 percent after a 4.3 percent slide since April 2. The Standard & Poor’s 500 Index climbed for the first time in three days, adding 0.2 percent to erase an earlier drop of 0.4 percent. Gold futures advanced 0.9 percent to $1,310.10, while the dollar dropped to the lowest level in more than five months.
Yahoo! Inc., EBay Inc., Google Inc. and Facebook Inc. jumped more than 2.2 percent, after a technology selloff broadened yesterday to wipe out the year’s gains in the Standard& Poor’s 500 Index. Alcoa Inc. reports first-quarter earnings today. Ukraine sent additional police forces into eastern regions after pro-Russian protesters seized government buildings.
The S&P 500 lost 1.1 percent yesterday, sending its three-day drop to 2.4 percent, the most since January. The Nasdaq 100 gauge fell 4.3 percent in the period, the most since 2011, while the Russell (RTY) 2000 Index of small companies sank 1.5 percent to a two-month low yesterday as its three-day loss worsened to 4.8 percent. The Russell gauge jumped 0.7 percent today.
The selloff came as valuations in technology stocks soared while the broader market has touched all-time highs. The Nasdaq 100 surged 257 percent from its low in March 2009 through a 13-year high on March 5. That beat the 177 percent increase for the S&P 500 in the period. The S&P 500 closed at a record on April 2.
Lofty Valuations
“Biotech and tech companies were trading at lofty valuations and they finally succumbed to the gravitational pull,” Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which oversees $63 billion in assets, said by phone. “A lot of these growth stocks had been taken down 10 to 20 percent, but usually that loss finds a bottom.”
Geopolitical Tension
“Gold is finding support from geopolitical tension as the Ukraine situation is heating up again,” Dan Denbow, a portfolio manager at the $1 billion USAA Precious Metals & Minerals Fund in San Antonio, said in a telephone interview. “The dollar weakness is also helping gold. We are seeing interest in overall commodities.”
Russia called on Ukraine to halt all military preparations in the east “immediately” or risk civil war. The U.S. has said there is evidence that some protesters may be paid provocateurs.
The MSCI Emerging Markets Index added 0.8 percent for a third day of gains. The gauge is heading for the highest close since November.
Developing nations face new risks and Russia’s takeover of Crimea last month injects geopolitical tension that’s “casting a pall” on the region, the International Monetary Fund said in a report today. The fund urged emerging markets to prepare for flows of capital back to advanced economies.
