Stocks rally on Wall Street, S&P 500 has best day since June
Wall Street kicked off March with a broad rally Monday that sent the Dow Jones Industrial Average more than 600 points higher and gave the S&P 500 its best day in nine months.
The S&P 500 climbed 2.4%, clawing back nearly all of its losses from last week. More than 90% of the stocks in the benchmark index rose, with technology, financial and industrial companies powering a big share of the S&P 500’s gains. Small company stocks also had a strong showing as they continue to outpace the broader market this year.
The wave of buying came as investors welcomed a move lower in long-term interest rates as U.S. bond yields declined after surging in recent weeks. The yield on the 10-year Treasury fell to 1.43% after reaching its highest level in more than a year last week.
Higher interest rates can slow the economy and discourage borrowing, so Wall Street gets jittery when there’s a big surge in rates.
“It moved really fast, the interest rate rise, and now it’s sort of leveling out so people are relieved that it’s not continuing to move up at a really fast pace,” said Tom Martin, senior portfolio manager with Globalt Investments.
The S&P 500 rose 90.67 points to 3,901.82, it’s biggest singleday gain since June 5. The Dow gained 603.14 points, or about 2%, to 31,535.51. The tech-heavy Nasdaq composite climbed 396.48 points, or 3%, to 13,588.83.
Smaller company stocks continued to rally, a sign that investors are feeling more confident about the economy’s prospects for growth. The Russell 2000 index picked up 74.27 points, or 3.4%, to 2,275.32.
After a strong start to the month, stocks turned lower in the last couple of weeks of February after a sudden, rapid rise in bond yields fueled concerns about higher inflation. The yield on the 10-year Treasury note climbed as high as 1.5% last week, the highest level in more than a year, before easing Friday.
Bond yields, which can influence rates on mortgages and many other kinds of loans, have been climbing this year, as investors bet that vaccination efforts and more government stimulus will lead to strong economic growth this year. However, along with strong economic growth comes concerns of inflation.
A handful high-level officials with the Federal Reserve will make speeches this week, which will give investors additional information on how concerned the nation’s central bank is about the economy and inflation. Lael Brainard, an advocate for looser monetary policies, will give a monetary policy speech on Tuesday and Fed Chair Jerome Powell will give a speech on Thursday.
Investors also had their eye on Washington Monday as a big economic stimulus bill advanced to the Senate. The House of Representatives approved Biden’s $1.9 trillion pandemic relief bill on Friday. The bill infuses cash across the struggling economy to individuals, businesses, schools, states and cities battered by COVID-19.
The stimulus bill would include yet another round of one-time payments to most Americans, including an expansion of other refundable tax credits like the child tax credit, and additional aid to state and local governments to combat the pandemic.
Johnson & Johnson rose 0.5% after the Food and Drug Administration gave approval for the company’s own coronavirus vaccine, one that does not require extensive refrigeration like the ones made by Moderna and Pfizer.
Investors will get several big economic reports this week, including February’s jobs report on Friday.
WASHINGTON >> U.S. manufacturing expanded in February at the fastest pace three years with the arrival of a surge in new orders.
The Institute for Supply Management reported Monday that its gauge of manufacturing activity rose to a reading of 60.8% last month, 2.1 percentage-points above the January level of 58.7%.
It was the strongest performance since February 2018. Any reading above 50 indicates expansion in the manufacturing sector. The 60.8% reading last month matched a similar reading in February 2018 and the level in those months was the highest since a reading of 61.4% in May 2004.
The survey found optimism increasing with five positive comments for every cautious comment, up from a 3-to-1 ratio in the January survey.
Timothy Fiore, chair of the ISM manufacturing survey panel, said the survey shows that a recovery is ongoing as manufacturers find ways to deal with
supply-chain shortages and lingering pandemic issues such as short-term shutdowns at some plants to sanitize facilities.
Manufacturers are also
benefiting from a shift, with Americans spending money on homes and other projects rather than going out to restaurants or shopping indoors, Fiore said.
“They are buying all kinds of items that the manufacturing economy builds,” he said. “As long as parts of the services sector are shut down, Americans are spending on hard goods.
The index for new orders rose to 64.8%, up from 61.1% in January, while the employment index stood at 54.4%, up from 52.6% in January, the report found.
But manufacturers are having to wrestle with lengthening delivery times for components at many factories. Michael Pearce, a senior economist at Capital Economics, said that reflected in part “increasing global shortages of electronics and in particular semiconductors.” He said these shortages could hold back the recovery in manufacturing output.
Last week, President Joe Biden signed an executive order intended to boost manufacturing jobs by strengthening U.S. supply chains for advanced batteries, pharmaceuticals, critical minerals and semiconductors.
A widening global shortage of semiconductors for auto parts is forcing major auto companies to halt or slow vehicle production just as they were recovering from pandemic-related factory shutdowns.
“The comments in the report also make it crystal clear that these shortages go well beyond just semiconductors with firms in every sector reporting shortages and problems with suppliers keeping up with demand,” Pearce said.
Other analysts said they believed manufacturing would be able to overcome the supply chain issues.
“Strong consumer demand for goods, increasing business investment, a roaring housing market and global economic growth are all supporting U.S. manufacturing,” said PNC Chief Economist Gus Faucher.