S&P 500’s Best Day since June as Bond Yields Slump

U.S. stocks went up and on Monday, March 1, the S&P 500 had its best day since June 2020, as investors’ confidence in the markets was restored.

A week-long rise in government-bond yields was pulled back and investors’ concerns over rising interest rates have been settled. The surge comes as a strong rebound after the Dow Jones, Nasdaq and S&P 500 all went down last week affected by losses in tech stocks triggered by fear that large stimulus packages and coronavirus developments could leave economy sectors at risk of overheating. A 10-year Treasury notes yields fall, triggered the indexes’ gains as bond prices went up.

Stocks, especially tech stocks, have been hit by abrupt changes in government-bond markets during the last trading sessions. Surging long-term interest rates signal an improving economy and make tech and other growth stocks less attractive options.

Analysts deem that investors are still considering the rise in rates as mostly positive and not as a threat yet, while believing that this year’s recurring theme will be the benefits of vaccines against higher rates. Some investors worry that resurgent bond yields, rising inflation concerns and possible increased spending from US President Biden’s relief package could take the stock market off its course.

Analysts turn to this week and the Fed for indications at to where the markets could be headed. If the Fed doesn’t act on easing higher inflation concerns, yields could continue to surge shaking the market. Volatility could continue to move markets until a clearer understanding of central banks’ stance is known.

Watch the following key events for indications as to where the US economy is headed: the US. Federal Reserve Beige Book on Wednesday, the OPEC+ meeting on Thursday, U.S. factory orders, initial jobless claims and durable goods orders on Thursday and the February U.S. NFP report on Friday.

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