As reported by CNBC, the US stock futures are slightly higher early Monday, 15/03/2021, directing a cautious opening later in the day. That followed last week’s rally that led the Dow and S&P 500 to record highs. Dow Jones Industrial Average (DJIA) implied an opening gain of more than 100 points. S&P 500 futures and Nasdaq 100 were also marginally higher.
CNBC reports that “Stocks rose last week with the Dow Jones Industrial Average rising 4% and the S&P 500 gaining 2.6%. The S&P 500 and the Dow both closed at record highs Friday. The Nasdaq Composite advanced 3% last week, despite a sell-off on Friday spurred by rising interest rates. The jump in bond yields has challenged growth stocks in recent weeks and sent investors into cyclical pockets of the market. The Nasdaq is up less than 1% this month, while the Dow and S&P are up 6% and 3.5%, respectively”.
The news further reports that “The U.S. 10-year Treasury hit its highest level in more than a year on Friday. The benchmark Treasury note reached 1.642%, its highest level since February 2020. The small-cap benchmark Russell 2000 surged more than 7% last week as investors rotated into smaller stocks that benefit from a sharp economic comeback”.
The previous week, investors cheered the $1.9trillion stimulus package that President Joe Biden signed into law. The IRS started processing $1400 direct payments on Friday and checks began hitting bank accounts over the weekend. The bill will insert nearly $20 billion into the covid-19 vaccines and $350 billion into state, local and tribal government relief.
CNBC reports that the central bank is expected to acknowledge much better growth in the economy. Bond pros are also watching to see whether Fed officials will tweak their interest rate outlook, which now does not include any rate hikes through 2023.
Goldman Sachs chief economist David Kostin told clients on Sunday that he expects interest rates to continue to rise in the coming months and investors will have to “continually grapple with the anxiety about economic overheating and Fed tightening.”