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New York (CNN Business)It’s been a turbulent week on Wall Street, starting with a massive selloff over worries about the Delta variant. But by Friday, stocks were on track to hit record highs.
On Monday, the market was deep in the red and the Dow (INDU) recorded its worst day since last October. The S&P 500 (SPX) and the Nasdaq Composite (COMP) logged their worst performances since May.
Investors, fearful that rising Covid-19 cases and the more infectious Delta variant would stifle the economic recovery, retreated from stocks and fled to the relative safety of government bonds.
“Although the variant has punctured the ‘vaccine euphoria’ that was prevalent in the market several months ago, investors seem convinced that economies will continue to open up gradually despite the new variant,” said Marshall Gittler, head of investment research at BDSwiss Group, in a note to clients.
And indeed, the market worked on recovering from Monday’s steep losses for the rest of the week. On Friday it’s on track to be better than ever: All three indexes are likely to notch new record highs.
At midday, the Dow was trading up 0.5%, or 188 points. The S&P was 0.8% higher and the Nasdaq rose 0.8%.
But this doesn’t mean the Delta concerns are entirely shrugged off. The rising cases could mean prolonged disruptions for already strained supply chains.
One thing is for sure: the Delta variant is bringing more uncertainty to the market.
Over the past few weeks, bond yields tumbled as investors poured into the safe haven investments. On Friday, as stocks headed higher, the 10-year US Treasury yield was at 1.29% at noon on Friday. Bond yields and prices move inversely to each other.
Economic data was mixed Friday. A preliminary reading of IHS Markit’s July purchasing managers’ index showed manufacturing at a record high for the data series, beating economists’ expectations.
But it didn’t look as good on the services front: The advance services PMI underperformed expectations and dropped to a five-month low.
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