Stocks were mixed in afternoon trading on Monday as Wall Street continues to eye the bond market, where yields pulled back a bit from Friday’s sharp increase.
The S&P 500 index was down less than 0.1% at 12:46 p.m. Eastern as rising technology and consumer discretionary shares were offset by declines in banks and energy stocks. The Dow Jones Industrial Average rose 13 points, or less than 0.1%, to 32,792. Meanwhile the Nasdaq Composite was up slightly, rising 0.2%.
Investors’ focus remains on the recovery of the U.S. and global economies from the coronavirus pandemic. The $1.9 trillion aid package for the U.S. economy has lifted investors’ confidence in a strong recovery from the pandemic in the second half of the year, but also raised concerns about a potential jump in inflation.
President Joe Biden also laid out a plan, in a prime-time speech last Thursday, to expand vaccine eligibility to all Americans by May 1, which should also translate into faster economic growth.
Rising interest rates continue to be a key concern for investors following the sudden jump over the last month in bond yields. Rates are not yet at a concerning level, and both the markets and economy can easily digest them, said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.
“The question ultimately becomes how well markets can digest and stay the course on the idea that these increases are temporary,” he said. “As well as coming to terms with the idea that temporary might be three or four quarters.”
Bond yields ticked mildly lower on Monday, with the 10-year U.S. Treasury note falling to 1.61% from 1.62% on Friday. The mild drop in yields was impacting bank stocks the most, where investors have placed big bets that higher yields would translate into banks charging borrowers higher rates. Bank of America was down 1.2%, Wells Fargo was down 1.2% and Citigroup fell 1.6%.
Technology stocks, which have been hurt by the rise in bond yields, resumed climbing. Apple and Tesla Motor Co. both rose roughly 1%. The bond market has pulled tech stocks mostly lower this year, because as yields push interest rates higher, they make high-flying stocks look expensive.
Markets got a mixed message from China, which has led the global recovery and reopened earlier than other countries from coronavirus shutdowns following the disease’s emergence in the central city of Wuhan in early 2020.
Retail sales there jumped nearly 36% year-on-year in January-February from a year earlier. The gain was exaggerated by comparison with the low level of activity during the shutdowns last year, ING said. Meanwhile, China’s jobless rate rose to 5.5% from 5.2% a year earlier, possibly affected by flare ups of coronavirus in some areas, analysts said.
The Shanghai Stock Exchange fell 1%, while other markets in Asia were mixed.