Update closes: US stocks rebound on Friday amid resilient economic data and excitement over Merck’s COVID-19 pill

U.S. stocks began the fourth quarter with a rally on Friday, as data on resilient consumer spending and manufacturing surveys showed the economic recovery was fueled by disruption caused by COVID-19 and related issues. to the supply chain.

The S&P 500 Index gained 1.2% to 4,357.04, the Dow Jones Industrial Average rose 1.4% to 34,326.46 and the Nasdaq Composite rose 0.8% to 14,566.70 .

After threatening to close more than 4% lower on the week amid the deepest bearish trading in S&P futures overnight, the market weathered a wilting mid-morning to limit its weekly loss to 2 , 2%.

Travel and leisure stocks outperformed after Merck (MRK) said it would seek emergency use authorization in the United States and elsewhere for its experimental COVID-19 antiviral therapy pill.

Advanced molnupiravir clinical trial halted in consultation with the US Food and Drug Administration to speed up approval after pill reduced risk of death or hospitalization by 50% compared to placebo in adults with mild to moderate COVID-19, according to the company.

Shares of Merck jumped 8.4%, while those of COVID-19 vaccine makers and alternative treatment providers fell. Moderna (MRNA) lost 11.4% and Regeneron (REGN) 5.7%.

In contrast, concert ticket machine Live Nation Entertainment (LYV) rose 8.4% and casino operator Penn National Gaming (PENN) gained 8.5%. The US ETF Global Jets (JETS), which brings together the main US airlines, rose 5.4%.

US personal spending rose 0.8% in August, the government reported, above expectations of a 0.6% gain. Personal income rose 0.2% against expectations of a 0.3% gain, after rising 1.1% in July.

“Spending on goods is still 20% higher than before the pandemic, despite the fact that the last stimulus check was paid almost six months ago and spending on services has exceeded pre-pandemic levels. pandemic, ”Jefferies economists Aneta Markowska and Thomas Simons said in a research note.

“The lack of demand destruction is the result of very healthy consumer finances.… While spending is expected to slow in the third quarter due to weak momentum and a likely slowdown in delta infections, we expect a sharp rebound in the fourth quarter as schools and offices reopen and the recovery in travel and leisure picks up. “

The University of Michigan consumer confidence index improved a little more than expected after plunging in July and August amid a spike in COVID-19 cases that peaked in early September.

The Institute of Supply Management and HIS Markit manufacturing sector surveys indicated that the sector is developing in line with recent trends.

Morgan Stanley economists lowered their estimates for third-quarter GDP and personal spending after the August figures were released. “Going into today’s report, we were tracking annualized GDP growth of 5.7% in 3Q21, with consumption growing 1.9%. Incorporating the latest spending data, as well as ‘Significant downward revisions until July, we’re lowering our tracking of real PCE to 0.2% and GDP to 4.5%, “they wrote.

The Atlanta Fed lowered its Nowcast estimate of third-quarter GDP growth to 2.3% from 3.2%.

The 10-year US Treasury yield fell 6 basis points to 1.47%. West Texas Intermediate crude oil gained $ 0.63 to $ 75.66 a barrel. Bitcoin jumped from $ 10 to $ 48,002.

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