NEW YORK, RAW – US stocks have climbed as a retreat in US Treasury yields helped lift expensive stocks in sectors such as technology as investors attempt to gauge the trajectory of inflation.
Among the 11 major S&P sectors, technology advanced 1.76 per cent and communication services rose 1.84 per cent as the top performing on the session, as yields on the benchmark 10-year Treasury bond hit a two-week low which also buoyed other richly-valued growth stocks.
Inflation concerns cooled for the time being as investors may be starting to view US President Joe Biden’s infrastructure bill as likely to be smaller, or unable to provide as big an economic boost, even after being pared down in size on Friday.
Bill Stone, chief investment officer, The Glenview Trust co in Louisville, Kentucky said growth stocks were likely getting a look on Monday due to the decline in yields.
“It seems to be the continued bounce in a rotation back to growth, the top performing sectors today are all growth stocks. It’s the continuing tug of war,” he said.
The Dow Jones Industrial Average rose 186.14 points, or 0.54 per cent, to 34,393.98, the S&P 500 gained 41.19 points, or 0.99 per cent, to 4,197.05 and the Nasdaq Composite added 190.18 points, or 1.41 per cent, to 13,661.17.
Tech giants Apple, up 1.33 per cent and Microsoft, up 2.29 per cent on the day, were the biggest boosts to the benchmark S&P index.
The sector has been among the worst performing for the month and year to date as inflation concerns have grown and bond yields have moved higher.
Equity markets have grown volatile in recent weeks as investors weigh strong economic data and fears that supply bottlenecks could lead to an extended stretch of higher prices, which would in turn force the Federal Reserve to scale back its massive monetary stimulus.
St Louis Fed President James Bullard said on Tuesday he expects the inflation rate to be above 2.0 per cent both this year and next but several Fed officials, including Bullard, continued to support the central bank’s policy in separate remarks.
After falling as much as 4.0 per cent from its May 7 record closing high, the S&P 500 is now less than 1.0 per cent off that level as investors begin to buy technology stocks that have come under pressure in a rising rate environment.
The release of US personal consumption data on Thursday, the Fed’s preferred inflation measure, will be a highlight of the economic data published this week.
Risk sentiment also improved as cryptocurrencies recovered some losses after a weekend sell-off fuelled by further signs of a Chinese crackdown on the emerging sector.
Bitcoin added to gains late in the session after an Elon Musk tweet about meeting with North American miners of the cryptocurrency.
Cabot Oil & Gas Corp and Cimarex Energy Co agreed to merge to form a US oil and gas producer with an enterprise value of about $US17 billion ($A22 billion), the latest deal in a sector rebounding from one of its worst downturns.
Shares of Cabot and Cimarex both tumbled about 7.0 per cent while the broader energy index climbed 0.99 per cent as oil prices rose 3.0 per cent.
Advancing issues outnumbered declining ones on the NYSE by a 2.13-to-1 ratio; on Nasdaq, a 1.06-to-1 ratio favoured advancers.
The S&P 500 posted 28 new 52-week highs and no new lows; the Nasdaq Composite recorded 105 new highs and 46 new lows.
Volume on US exchanges was 8.29 billion shares compared with the 10.43 billion average for the full session over the last 20 trading days.