A trader on the floor of the New York Stock Exchange.
Source: New York Stock Exchange
In the long run, futures held overnight, after the S&P 500 recorded its first week lost in three.
Dow Jones industrial average futures were flat. The S&P 500 futures and Nasdaq 100 futures were also slightly modified.
The term move came after the S&P 500 and Nasdaq Composite gained a two-week winning streak, with a loss of 0.7% and 1.6%, respectively, last week. The Dow blue chip gained 0.1% in the same period, supported by Caterpillar and JPMorgan.
Some equity investors have been concerned about the rapid rise in bond yields in recent weeks, as they could particularly affect high-growth companies that rely on light loans, while diminishing the relative attractiveness of equities.
The 10-year treasury yield jumped 14 basis points last week to 1.34%, close to its highest level since February 2020. So far this month, the reference rate has risen 25 basis points.
“This yield move should be something investors should watch closely,” Matt Maley, chief market strategist at Miller Tabak, said in a statement. “Just because long-term rates are extremely low on a historical basis, we don’t think they’re going to have to grow as much as most experts think … before they impact the stock market.”
Meanwhile, many on Wall Street believe that the jump in bond yields reflects a sign of growing confidence in the economic recovery, and equities should be able to absorb higher rates amid strong gains.
“We do not see the recent rise in yields as a threat to the bull market,” Keith Lerner, Truist’s chief market strategist, said in a statement. “Given that we are in the early stages of an economic recovery, monetary and fiscal policy remains supportive, with a sharp return to earnings and relatively favorable valuations, we remain overweight to equities.”
The market is heading for the last week of February, with solid gains. The Dow and S&P 500 were up more than 5% this month, while the Nasdaq was up 6.2%. Russell 2000 with small capitalization surpassed with a gain of 9.3% this month.
On the pandemic front, the White House said it expects to deliver millions of delayed doses of coronavirus vaccine this week after a winter storm affected logistics. Gov. Andrew Cuomo said Sunday that a New York resident tested positive for Covid-19, first identified in South Africa.
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