S&P 500 hits fresh peak as cyclicals roar back

New York (July 10) - The S&P 500 index clocked a new record high on Friday as economy-sensitive cyclical sectors including financials and energy rebounded after a selloff, recouping all its loses triggered by growth worries earlier in the week.

Ten of the 11 major S&P 500 sectors were higher, with a 2.4% jump in financials leading gains, as the index eyed its best day in almost three weeks. Other sectors such as industrials (.SPLRCI) and materials also rose about 1.5% each.

The S&P 500 banks index (.SPXBK) jumped 2.8% as the benchmark 10-year Treasury yield snapped an eight-day losing streak.

Energy (.SPNY) advanced 1.7% but was still set to log a weekly decline of 3.5%.

Friday's gains have put all the three main indexes on track to end the week higher, shrugging off a recent rally in bond markets on concerns that the recovery in the U.S. economy was losing steam amid the fast-spreading Delta variant of the coronavirus.

"In any sell off, there have been buyers, and this pattern is repeated for months where any meaningful selloff is met almost immediately by way of buying," said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

Focus will now shift to second-quarter earnings, with big banks reporting next week. Analysts expect earnings growth of 65.8% for companies in the S&P 500 index in the quarter, up from a previous forecast of 54% growth at the start of the period, according to Refinitiv IBES data.

"Once we enter the earnings season, we will expect a sort of cushion for the market," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

"It won't just be a certain group of companies that are expected to report strong earnings, it will be most sectors of the market."

Reuters