Wall Street’s momentum swings back
Stocks are ticking higher on Wall Street Tuesday, recovering some of last week’s losses to pull closer to their record highs.
The S&P 500 was up 0.9 percent in afternoon trading and back within 1 percent of its record set earlier this month. The Dow Jones Industrial Average was up 154 points, or
0.5 percent, at 30,968, as of 2:11 p.m. Eastern time, and the Nasdaq composite was 1.5 percent higher.
Wall Street’s rally is getting back on track after stocks ran out of steam last week. Markets have been rising on enthusiasm about a coming economic recovery as COVID-19 vaccines roll out and Washington gets set to try for another massive round of stimulus for the economy.
Janet Yellen, President-elect Joe Biden’s nominee to be Treasury Secretary, is calling on Congress to do more to boost the economy. In testimony prepared for her confirmation hearing on Tuesday, she said that with interest rates near their record lows, “the smartest thing we can do is act big” to avoid an even worse downturn in the near term and scarring for the economy in the long term.
Biden last week released details of a $1.9 trillion plan to bolster the economy, which would include $1,400 cash payments for most Americans. Democrats are also pushing for an accelerated rollout of COVID-19 vaccines, a higher minimum wage for workers and enhanced benefits for laid-off workers. The hope is that such stimulus can carry the economy until later this year, when more widespread vaccinations get life returning to some semblance of normal.
“If most of this is implemented, it does suggest significant pickup in economic growth as we head through to the fourth quarter of this year,” said David Kelly, chief global strategist at JPMorgan Funds.
The case for such stimulus has been rising by the day. Dismal reports have piled up showing how the worsening pandemic has more workers applying for jobless benefits and shoppers feeling less confident.
Tuesday’s Senate Finance Committee hearing with Yellen is one of several that the Senate will be holding as the incoming Biden administration tries to get its top Cabinet officials in office quickly. Biden is set to take the oath of office on Wednesday, ending President Donald Trump’s four-year term.
Besides stocks, the optimism about an eventual acceleration for the economy and another round of stimulus have also helped push Treasury yields up sharply recently.
The yield on the 10-year Treasury climbed to 1.09 percent from 1.08 percent late Friday. Higher rates could eventually add pressure on stocks, underscoring more how expensive stocks have become relative to the profits that companies are producing.