Stocks bounced back from a wobbly start Monday to notch a fifth-straight gain, as Wall Street continued to eye the bond market. Treasury yields pulled back from Friday’s sharp increase. The S&P 500 index rose 0.7% to a new high as technology and consumer discretionary shares’ gains were offset by falling banks and energy stocks. The Dow Jones Industrial Average gained 0.5%. The Nasdaq Composite jumped 1.1%. Investors focused on the U.S. and global economic recovery from the pandemic. Bond yields ticked mildly lower on Monday, with the 10-year U.S. Treasury note falling to 1.61% from 1.62% on Friday.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
Stocks shook off an early stumble and were headed higher in afternoon trading Monday, continuing last week's record-setting run.
The S&P 500 was up 0.3% after having been down 0.5% in the early going. Technology stocks and companies that rely on consumer spending helped lift the market, outweighing a pullback in financial, energy and other sectors.
The Dow Jones Industrial Average rose 89 points, or 0.3%, to 32,864 as of 2:29 p.m. Eastern time, while the tech-heavy Nasdaq Composite was up 0.6% and the Russell 2000 index of smaller companies inched up 0.1%. The S&P 500, Dow and Russell 2000 each set all-time highs on Friday.
Wall Street continued to eye the bond market, where yields pulled back a bit from Friday’s sharp increase. Investors also continue to focus 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 affecting 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 0.8%, Wells Fargo was down 1% and Citigroup fell 1.7%.
Technology stocks, which have been hurt by the rise in bond yields, resumed climbing. Apple and Tesla Motor Co. both rose nearly 2%. 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.