By Alexander Osipovich and Joe Wallace
U.S. stocks surged Monday as a weekslong advance in government
bond yields stalled, easing investors' jitters over rising interest
The Dow Jones Industrial Average soared 643 points, or 2.1%, in
afternoon trading, putting the index on track for its biggest
one-day increase since November. The S&P 500 climbed 2.3%,
while the technology-heavy Nasdaq Composite was up 2.5%.
The gains marked a robust rebound after all three indexes
declined last week, weighed down by losses among tech stocks.
Monday's advance came as the yield on 10-year Treasury notes,
the benchmark borrowing cost in U.S. debt markets, slipped to
1.446% from 1.459% Friday. Yields fall when bond prices rise.
Stocks, and particularly shares of tech companies, have been
buffeted by volatile moves in government-bond markets in recent
trading sessions. A long period of low interest rates underpinned
the stock market's boom over the past year, by making it less
attractive for investors to put money in bonds. Last week's climb
in yields called that into question.
It also raised the specter that the U.S. Federal Reserve might
put an end to easy-money policies to combat inflation -- even
though the Fed itself has played down such concerns.
"Today is kind of a reckoning with the reality that the Fed's
not moving anytime soon," said Mike Dowdall, a portfolio manager at
BMO Global Asset Management.
"It's really hard to paint a negative picture of this market,"
he added, pointing to the ramp-up in coronavirus vaccinations and
the prospect of further fiscal stimulus from Washington.
"Everyone's chasing their shadows and saying it's rates here, it's
inflation there. But those just aren't real."
The Senate is preparing to move ahead this week with President
Biden's sweeping coronavirus relief package. The House passed the
$1.9 trillion package over the weekend, and Senate approval appears
more likely after senators dropped a minimum-wage increase that
some centrist Democrats had opposed.
Democrats are racing to finish the package before March 14, when
certain types of federal unemployment assistance are set to
Some investors remain concerned that resurgent bond yields and
mounting inflation pressures could still derail the stock market,
especially with the prospect of massive spending from Mr. Biden's
"The concern on the reflation front boils down to the extent of
stimulus, " said Brian O'Reilly, head of market strategy for
Mediolanum International Funds. "The market is beginning to rightly
question how much is too much."
Monday's gains were broadly shared across the stock market, with
all 11 sectors of the S&P 500 in positive territory. Tech
stocks rebounded after last week's bruising selloff, with Apple
climbing 4.3% and Tesla gaining 5%.
In corporate news, Exxon Mobil shares advanced 4.3% after the
oil major, which has been under pressure from activist investors,
added two new board members.
Boeing shares rallied 5.3% after United Airlines said it was
buying 25 new 737 MAX jets, a boost for the aircraft maker that is
still trying to recover from the jet's nearly two-year
Class B shares of Warren Buffett's Berkshire Hathaway climbed
3.8% after the conglomerate on Saturday posted an increased
fourth-quarter profit and reported that it had bought back nearly
$25 billion in shares last year, a larger-than-usual buyback for
Shares of Johnson & Johnson added 1.1% after the U.S. over
the weekend authorized its single-shot coronavirus vaccine.
Fresh data released Monday showed that activity at U.S.
factories grew last month at its fastest pace since the onset of
the pandemic. The Institute for Supply Management's February
manufacturing index climbed to 60.8 in February, up from 58.7 in
January and beating economists' expectations of 58.9. Any level
above 50 indicates an expansion of activity.
The corporate earnings season is winding down, with Zoom Video
Communications and Novavax scheduled to report quarterly results
after markets close.
Several top Fed officials are scheduled to make public
appearances later this week, and investors will be monitoring them
closely to see they voice any concerns about bond yields.
"This week is key," said Andrea Carzana, a fund manager for
London-based Columbia Threadneedle Investments. If the Fed doesn't
seek to tamp down expectations of higher inflation, yields could
continue to rise, rattling the stock market, according to Mr.
"I'm expecting turbulence or volatility to remain with us until
we have a better understanding of where central banks stand," he
In commodities, futures on benchmark Brent crude oil fell 1.3%
on Monday to $63.56 a barrel.
Improving investor sentiment buoyed overseas markets. The Stoxx
Europe 600 gained 1.8%, led higher by shares of travel-and-leisure
companies, whose fortunes hinge on the reopening of economic
In Asia, Japan's Nikkei 225 rose 2.4%, while China's Shanghai
Composite Index added 1.2%.
Write to Alexander Osipovich at firstname.lastname@example.org
and Joe Wallace at Joe.Wallace@wsj.com
(END) Dow Jones Newswires
March 01, 2021 14:16 ET (19:16 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.