For the second straight session Wall Street’s main indexes gained on Monday. The push up was led by technology and financial stocks following its worst week in two years as rising inflation ignited worries among investors of accelerated interest rate increases.
Nine of the eleven major S&P sectors were higher, with only the interest-rate sensitive utilities and real estate indexes behind.
At 11:43 a.m. EST, the Dow Jones Industrial Average increased 287.18 points, or 1.19 percent, at 24,478.08. The S&P 500 increased 25.88 points, or 0.99 percent, at 2,645.43. The Nasdaq Composite increased 86.88 points, or 1.26 percent, at 6,961.37.
Although Friday closed the session with a 1.5 percent gain, the indexes remain down since inflation fears appeared when the U.S jobs and wages growth data was released February 2nd. This promoted a rally in bond yields and a sell-off in stocks.
“There are some open doors left, notably, where interest rates are and where they are heading. So while there has been some relief in some assets we don’t think the ‘all clear’ has been sounded just yet,” said Eric Freedman, a chief investment officer.
Early Monday, U.S. 10-year Treasury yields climbed to a new four-year high of 2.902. The increase in Treasury yields have taken away the appeal of stocks. Wall Street’s volatility gauge, VIX, was at 27.94, more than double its 50-day moving average.
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U.S. President Donald Trump revealed an infrastructure plan requesting Congress to approve $200 billion over a 10-year period to bring on $1.5 trillion in improvements paid for by states, localities as well as private investors. The plan also suggests cuts to lower the deficit by $3 trillion over the same period of time.
“The concern is if there is going to be a much higher deficit, a lot more borrowing that’s going to go on. That’s why I think the bond market is setting the tune more so than the stock market,” said Paul Nolte, a portfolio manager.
The S&P materials index increased by 1.2 percent and industrials rose 0.73 percent. The energy sector climbed 1.46 percent as the price of oil gained.
Among stocks, General Dynamics dropped 0.8 percent after the U.S. defense contractor agreed to purchase CSRA for nearly $7 billion. CSRA rocketed 32 percent.
Cisco rose 2.6 percent and American Express gained 1.5 percent after Instinet upgraded both of the Dow components to “buy”.
Advancing issues outnumbered decliners on the NYSE by 1,692 to 1,150. On the Nasdaq, 1,752 issues rose and 1,095 fell.