The rollout of vaccines and falling COVID-19 case levels also continued to stoke hope for an acceleration in economic activity this year even as the number of U.S. deaths nears a milestone of 500,000.
Rising yields and inflation worries also were seen as underlining worries over a potential hawkish turn by the Federal Reserve, even though the central bank has committed to holding off on policy changes until inflation moves above its 2% target.
The difficulty for equity investors is that the further the Fed gets behind market forecasts both for GDP and rates, the greater the worry over a tantrum,” by market participants over a potential Fed tightening.
The Fed’s deliberate efforts to displace market expectations by overshooting its 2% target should allow for further steepening of the yield curve, while real, or inflation-adjusted, rates remain negative, allowing cyclicals and companies with low variable costs to outperform.
*Fed Chairman Jerome Powell is set to testify before Congress on monetary policy this week. His comments on rates and inflation could determine the market direction for the week.*
*The Conference Board said its leading economic indicators index had increased 0.5 points in January to a reading of 110.3. Economists had expected the index to show a rise of 0.4 points.*
*Treasury yields climbed and a key part of the curve -- the gap between 5- and 30-year yields -- touched the highest level in more than five years. Yields rose in Asia, while European government yields reversed an advance and edged lower.*
The Dow was lead by Discovery Inc, which jumped 8.9% after the media company said it was expecting 12 million global paid streaming subscribers by the end of February, as coronavirus restrictions kept people at home.
On the pandemic front, the White House said that it expects to ship out millions of delayed coronavirus vaccine doses this week after a sweeping winter storm disrupted logistics. Gov. Andrew Cuomo said on Sunday that a New York resident has tested positive for the Covid-19 variant first identified in South Africa.
*Commodities were almost uniformly green. Brent oil climbed above $65 a barrel as Goldman Sachs Group Inc. predicted prices could advance into the $70s in coming months. Copper briefly rose above $9,000 a metric ton for the first time in nine years, taking another step closer to an all-time high set in 2011 as investors bet that supply tightness will increase as the world recovers from the pandemic.*
Volume on U.S. exchanges was 14.38 billion shares, compared with the 16.05 billion average for the full session over the last 20 trading days.
European stocks closed lower on Monday amid cautious trade in global markets.
Developments surrounding the pandemic and vaccine rollout remain in focus. The U.K. on Monday unveiled how it plans to lift lockdown measures gradually in the coming months, as its vaccination rollout maintains its good pace.
*On the data front, Germany’s Ifo Institute business climate index rose in February, with sentiment in Europe’s largest economy improving by more than expected on both current conditions and expectations.*
*On Monday, European Central Bank President Christine Lagarde said in a speech that the central bank is “closely monitoring the evolution of long-term nominal bond yields.” European sovereign bonds yields moved lower in response to her remarks.*
By: via @AlliesFin Serve Stock Market
