Stocks fall as investors mull inflation concerns, recovery

Monday, February 22, 2021 | Damian J. Troise And Alex Veiga, AP Business Writers


In this Tuesday, Feb. 16, 2021, American flags hang outside of the New York Stock Exchange in New York. Stocks are opening broadly lower on Wall Street, getting the week off to a sluggish start and continuing a losing streak. The S&P 500 gave up 0.6% in the early going Monday, Feb. 22 and other major indexes were also lower. (AP Photo/Frank Franklin II, File)

Stocks mostly fell in afternoon trading on Monday, adding to the declines that started last week as investors continue to be concerned about rising interest rates and the potential for inflation down the road.

The S&P 500 was down 0.3% as of 2:57 p.m. Eastern, pulled down by technology and health care companies which have done well over the past year. The Dow Jones Industrial Average rose 135 points, or 0.4%, to 31,629 after edging lower earlier in trading. The technology-heavy Nasdaq fell 1.6%.

Investors remain focused on the future of global economies badly hit by COVID-19 and the potential for more stimulus to fix them. The U.S. House of Representatives is likely to vote on President Joe Biden’s proposed stimulus package by the end of the week. It would include $1,400 checks to most Americans, additional payments for children, and billions of dollars in aid to state and local governments as well as additional aid to businesses impacted by the pandemic.

But the large amount of stimulus being pumped into the economy has given some investors pause as worries of inflation have reentered the market after being nonexistent for more than a decade. Yields on U.S. Treasury bonds and notes have risen in the last several weeks as investors have predicted more inflation would come with the economic recovery.

“There are some risks out there,” said Gary Schlossberg, global strategist at Wells Fargo Investment Institute. “The issue is are we just normalizing back to where we were before the pandemic or are we talking about a sea change.”

The yield on the 10-year Treasury rose to 1.36% from 1.34% late Friday and has been rising steadily throughout the year. The higher yields have helped lift banks, which rely on higher yields to charge more lucrative interest on loans. Morgan Stanley rose 2.1%.

There was a lot of churn within different sectors just behind the broader market losses. The S&P 500 was just about evenly split between winners and losers.

Technology stocks accounted for a big share of the selling. The sector, which powered much of the market's gains in 2020, is on pace for a fifth straight loss. That pullback helped drag down the Nasdaq, while the Dow, which isn't as heavily weighted with tech stocks, rose.

Tech stocks have enjoyed big gains throughout the pandemic, as investors bet that consumers spending more time at home would increasingly rely on mobile devices, PCs, video streaming and other technology products and services. But as the number of new coronavirus cases has declined recently after a sharp spike late last year and more people get vaccinated, investors are beginning to snap up stocks in areas of the market that are expected to do better in a post-pandemic economy.

“They parked in technology as a temporary place for their capital while the pandemic raged, and now they're looking to go back to their pre-COVID asset allocation," said Mike Zigmont, director of trading and research at Harvest Volatility Management.

Airlines, which have been battered by the virus pandemic, rose after Deutsche Bank upgraded its view on the sector and the potential for recovery as COVID-19 cases fall and vaccination rates increase. American Airlines jumped 10.9%, while both Delta and United Airlines rose more than 5%.

Traders continued to bid up shares in energy companies, which are getting a boost from higher energy prices. The sector have risen four out of the last five days. Exxon Mobil was up 4.2%.

The price of crude U.S. crude oil rose 3.8% to $61.49 a barrel. It's now up 27% for the year.

Brent crude, the international standard, rose 3.7% to $65.24 a barrel, and is up 26% this year. Goldman Sachs predicted in a research note that the price of Brent crude would reach $70 by the second quarter.



7 Electric Vehicle (EV) Stocks That Are Ready to Rebound

The electric vehicle (EV) sector was nearly as frothy as the “pandemic stocks” in 2020. It wasn’t that the EV sector was dormant during the Trump administration.

But, as the saying goes, elections have consequences. And Wall Street understands they can make money in any administration. And as a bet that Joe Biden would win the presidency, electric vehicle stocks soared.

For starters, the Biden administration has already said it will prioritize climate change like no administration ever has. And one way they are going to do that is to incentivize the production and purchase of electric vehicles.

And to take advantage of this shift towards electric vehicle stocks, many private companies raced to get in on the action. The preferred way for many of these companies to go public was via a Special Purpose Acquisition Company (SPAC). A SPAC is basically a shortcut to the traditional IPO process.

However, what goes up frequently goes down and since late February, EV stocks have been getting battered. But this is creating an opportunity because the electric vehicle is still supposed to see exceptional growth over the next five years.

To help you take advantage of this we’ve created this special presentation that includes seven stocks that appear to be ready to take the next leg up.

View the "7 Electric Vehicle (EV) Stocks That Are Ready to Rebound ".


Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
United Airlines (UAL)1.2$56.16-3.9%N/A-3.41Hold$50.11
Morgan Stanley (MS)2.0$80.18-0.7%1.75%13.52Buy$68.60
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