- CBOE Volatility Index drops 7.7% after Treasury Secretary Mnuchin’s testimony.
- Higher risk appetite boosts technology shares.
- Easing concerns over trade conflict allows industrials to rebound sharply.
Major equity indexes in the United States opened higher on Thursday and built on their positive start to end the day with robust gains.
Before the earnings figures from big technology companies, the improved sentiment boosted the risk-sensitive the S&P 500 Information Technology Sector (SPLRCT), which ended the day with a 1.8% gain, to a record high with Facebook, Amazon, Google Alphabet all reaching intra-day record peaks.
Earlier in the session, the U.S. Treasury Secretary Steven Mnuchin said that they were focused on retaliatory trade measures from other countries and resolving them while testifying before the Congress. The S&P 500 Industrials Sector (SPLRCI), which was hit the hardest whenever fears surrounding a trade war escalated, staged a comeback to close the day 1.12% higher.
“The fears we had yesterday of a trade war, seem to have temporarily subsided, and investors are pushing trade tariffs aside for the moment as we enter into the earnings season. Ahead of earnings, investors are making bets on what seems to be very reliable, and that is technology,” Andre Bakhos, managing director at New Vines Capital LLC., told Reuters. In fact, the CBOE Volatility Index (VIX), Wall Street’s fear gauge, dropped nearly 8% to echo the optimistic outlook.
On the other hand, before JPMorgan Chase, Wells Fargo and Citigroup release their reports on Friday, the S&P 500 Financials Sector (SPSY) stayed relatively quiet.
For the day, the Dow Jones Industrial Average added 225.45 points, or 0.91%, to 24,925.9, the S&P 500 rose 24.31 points, or 0.88%, to 2,798.33 and the tech-heavy Nasdaq Composite gained 107.31 points, or 1.39%, to 7,823.92.
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