Wall Street Opens Higher as Bond Market Tightness Unwinds; Dow up 240 Pts

By Geoffrey Smith 

Investing.com -- U.S. stocks opened higher on Friday supported by a return to normal conditions in an overbought bond market. 

Yields on U.S. Treasury bonds rose all along the yield curve, amid perceptions that this week's growth scare had been overdone. The prospect of big Treasury bond auctions next week also restored some balance to a market that had been dominated by Federal Reserve buying amid a general lack of liquidity in recent days.  The rise in yields supported financial stocks, which have cheapened this week despite the prospect of another strong set of results when earnings season kicks off next Tuesday. Bank of America (NYSE:BAC) stock and Citigroup (NYSE:C) stock rose 2.5%, while Goldman Sachs (NYSE:GS) stock rose 2.7%.

By 9:40 AM ET (1340 GMT), the Dow Jones Industrial Average was up 244 points, or 0.7%, at 34,666 points. The S&P 500 was up 0.5% but the Nasdaq Composite underperformed, against a backdrop of concern about a new and wide-ranging executive order from President Joe Biden claiming to champion the consumer against big business. 

Biden's latest executive order focuses on the need to promote competition. While Internet service provision and the planned return of 'Net Neutrality' garnered most of the headlines, the order also promised to make things tougher for airlines, drug stores and the makers of medical products. 

Yet there was no obvious pattern to the market's reaction, suggesting that many would like to see more detail before jumping to conclusions. 

General Motors (NYSE:GM) stock rose 3.6% after a bullish note from Wedbush praising its electrification strategy and highlighting its huge valuation discount to Tesla (NASDAQ:TSLA). The report also pulled Ford Motor (NYSE:F) up by over 2% in sympathy, while sentiment towards legacy automakers was also underpinned by Germany's Volkswagen (OTC:VWAPY)announcing 11 billion euros ($13 billion) in operating profit in the first half of the year. VW ADRs rose 5.1%.

The largely symbolic action by the Biden administration to expand the blacklist of Chinese companies didn't stop a broad rebound in Chinese ADRs after a week of more substantial bad news from their home country. Didi Global  (NYSE:DIDI) ADRs rose 7.4%, while JD.com (NASDAQ:JD) ADRs rose 1.9% and Alibaba (NYSE:BABA) ADRs rose 2.0%.

Reopening plays broadly corrected upwards after a torrid week in which growing reports about the delta variant of the Covid-19 virus have cast doubt on the world's ability to end the pandemic. San Francisco Fed President Mary Daly told the Financial Times in an interview that the spread of Covid-19 through the rest of the world had the potential to act as a headwind on U.S. growth, and said that "premature" declarations of victory over the virus were "one of the gravest risks" to the outlook right now. 

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BioNTech (NASDAQ:BNTX) stock rose 2.7% and Pfizer (NYSE:PFE) stock rose 2.0% after the two companies said they will ask for emergency use authorization for a 'booster shot' of its vaccine, after an early study showed it bolstered patients' defenses against the disease. They'll also start work on an updated vaccine aimed at ensuring equally high degrees of protection against more recent Covid variants.