(Reuters) – Wall Street’s main indexes rose for a second straight session on Monday, led by gains in technology and financial stocks, after its worst week in two years as the specter of rising inflation led to fears of accelerated interest rate hikes.
Nine of the 11 major S&P sectors were higher, with only the interest-rate sensitive utilities .SPLRCU and real estate .SPLRCR indexes in the red.
By 11:43 a.m. ET, the Dow Jones Industrial Average .DJI was up 287.18 points, or 1.19 percent, at 24,478.08. The S&P 500 .SPX was up 25.88 points, or 0.99 percent, at 2,645.43. The Nasdaq Composite .IXIC was up 86.88 points, or 1.26 percent, at 6,961.37.
Despite gains of about 1.5 percent on Friday, the three indexes are still 6 percent to 6.5 percent lower since Feb. 2, when strong U.S. jobs and wages growth data sparked inflation fears, igniting 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, chief investment officer for U.S. Bank Wealth Management.
U.S. 10-year Treasury yields US10YT=RR hit a new four-year high of 2.902 earlier Monday, but are currently near their session-lows at 2.8494 percent. [US/]
Equities for years have looked relatively attractive compared to the low yields offered by bonds, but the rise in Treasury yields has diminished the allure of stocks, especially with stock valuations at historically expensive levels.
That, along with a reversal of bets on low volatility drew the three major U.S. indexes to correction territory last week.
Wall Street’s fear gauge, VIX, short for the CBOE Volatility index .VIX was last at 27.94 on Monday, more than double its 50-day moving average but trading in a narrow 2-point range.
President Donald Trump unveiled a long-awaited infrastructure plan that asks the U.S. Congress to authorize $200 billion over 10 years to stimulate $1.5 trillion in improvements paid for by states, localities and private investors.
While the proposal will recommend cuts that would lower the deficit by $3 trillion over 10 years, it is likely to stoke a debate on spending that began when Congress passed a tax overhaul in December.
“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, portfolio manager at Kingsview Asset Management in Chicago.
The S&P materials .SPLRCM index rose 1.2 percent and industrials .SPLRCI gained 0.73 percent. They were outdone only by the energy sector’s .SPNY 1.46 percent jump as oil prices rose. [O/R]
Advancing issues outnumbered decliners on the NYSE by 1,692 to 1,150. On the Nasdaq, 1,752 issues rose and 1,095 fell.
Reporting by Sruthi Shankar in Bengaluru, additional reporting by Sujata Rao in London; Editing by Savio D’Souza