American flags hang outside of the New York Stock Exchange, in this Tuesday, Feb. 16, 2021, file photo. Stocks are higher across the board in early trading on Wall Street as bond yields ease lower following several weeks of shooting higher. Traders were also watching Washington as a big economic stimulus bill moved to the Senate. The S&P 500 was up 1.5% in the early going Monday, March 1, 2021. (AP Photo/Frank Franklin II, File)
Stocks are rising across the board on Wall Street Monday, on pace for the market's best day in nearly nine months as traders welcome a move lower in long-term interest rates as a recent surge in U.S. bond yields eases. Investors are also watching Washington as a big economic stimulus bill advanced to the Senate.
The S&P 500 climbed 2.5% as of 3:19 p.m. Eastern., clawing back most of its losses from last week and on track for its best day since June 5.
More than 95% of the stocks in the benchmark index were higher, with technology, financial and industrial companies among those driving the rally. The Dow Jones Industrial Average was up 665 points, or 2.2%, to 31,600 and the Nasdaq Composite rose 3%.
Smaller company stocks continued to outgain the broader market, a sign that investors are feeling more confident about the economy's prospects for growth. The Russell 2000 index was up 3.6%.
Much of the focus on Wall Street is on the bond market, where Treasury yields were headed lower. The yield on the 10-year Treasury note fell to 1.45% after going as high as 1.5% last week, the highest level in more than a year. Higher interest rates can slow the economy and discourage borrowing, so Wall Street gets jittery when there's a big surge in rates.
“It moved really fast, the interest rate rise, and now it’s sort of leveling out so people are relieved that it’s not continuing to move up at a really fast pace,” said Tom Martin, senior portfolio manager with Globalt Investments.
Bond yields, which influence interest rates on mortgages and many other kinds of loans, have been steadily climbing much of the year, as investors have bet that vaccination efforts and more government stimulus will lead to strong economic growth this year. However, along with strong economic growth comes concerns of inflation.
A handful high-level officials with the Federal Reserve will make speeches this week, which will give investors additional information on how concerned the nation's central bank is about the economy and inflation. Lael Brainard, an advocate for looser monetary policies, will give a monetary policy speech on Tuesday and Fed Chair Jerome Powell will give a speech on Thursday.
The House of Representatives approved Biden’s $1.9 trillion pandemic relief bill on Friday and it now goes to the Senate for approval. The bill infuses cash across the struggling economy to individuals, businesses, schools, states and cities battered by COVID-19.
The stimulus bill would include yet another round of one-time payments to most Americans, including an expansion of other refundable tax credits like the child tax credit, and additional aid to state and local governments to combat the pandemic.
Johnson & Johnson rose 0.7% after the Food and Drug Administration gave approval for the company's own coronavirus vaccine, one that does not require extensive refrigeration like the ones made by Moderna and Pfizer.
Technology and financial companies made some of the biggest gains. Apple surged 5% and Citigroup rose 6.1%. Companies that rely on consumer spending also fared well. Etsy jumped 11.6% and cosmetics retailer Ulta Beauty gained 5.1%.
Industrial companies, including airlines beaten down by the virus pandemic, also helped boost the broader market. American Airlines rose 1.1%.
Investors will get several big economic reports this week, including February's jobs report on Friday. On Monday a report on manufacturing came in better than expectations, and new orders also came in better than expected.
Featured Article: Google Finance Portfolio7 Infrastructure Stocks That May Help Rebuild America
Despite their disagreements (real or imagined) on almost everything, Democrats and Republicans alike love infrastructure projects. These are easy wins for Congressional leaders seeking re-election. And they typically spur job creation, which contributes to economic growth.
With that in mind, it’s ironic that, in the last four years, the United States Congress did not pass an infrastructure bill.
Nevertheless, even with (and maybe because of) the gridlock that looks to be in the country’s future, the infrastructure looks to be on the front burner again. The economic recovery is still far from complete. Unfortunately, neither are America’s roads, energy grid, telecommunications systems, and the like. That means that it would seem like a good policy for a Biden administration to look at an infrastructure bill.
Biden will be under pressure to endorse the $1.5 trillion infrastructure package that the Democrat-controlled House of Representatives passed in July. But the package may need to be tweaked a bit since it currently includes climate change initiatives that have kept the bill from advancing through the Senate.
However, it appears that the economy will need some significant juice after whatever this winter brings in terms of the virus. And if calmer heads prevail (we can always hope), there may be a major infrastructure bill to stimulate job creation. And we’ve identified seven stocks that should bear watching if this comes to pass.
View the "7 Infrastructure Stocks That May Help Rebuild America"
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