Wall Street rebounded modestly after last week’s sell-off

NEW YORK (Reuters) – U.S. stocks rose modestly on Monday as investors engaged in some bargain-hunting after last week’s losses, the largest percentage drop in 2023 for key benchmarks, amid concerns about potential interest rate increases to quell rising inflation. .

Each of the three major indices rose more than 1% shortly after the opening bell, due in part to a slump in Treasury yields. Stocks then gave up some of the gains as yields are off today’s lows. The yield on two-year Treasury notes, which usually moves according to interest rate expectations, fell after touching a nearly four-month high.

“Bounce back a bit because Friday’s reaction was an overreaction,” said Ken Polcari, managing partner at Kace Capital Advisors in Boca Raton, Florida.

“If inflation does not subside and continues to run higher over the next couple of months (the Fed), it could certainly push it higher. The realization now that there is no pivot coming this year and people who still think the pivot is coming this year need to get their heads checked.” .

The Dow Jones Industrial Average increased 141.43 points, or 0.43%, to 32958.35 points, the Standard & Poor’s 500 increased 23.19 points, or 0.58%, to 3993.23 points, and the Nasdaq Composite Index increased 107.45 points, or 0.94%, to 11502.39.

Last week, the Dow Jones Industrial Average fell by the most weekly percentage since September, and the S&P 500 and Nasdaq experienced the largest weekly percentage decline since December, as economic data and comments from US Federal Reserve officials heightened expectations that the central bank would become bolder in the increase. interest rates.

Economists at UK-based banks Barclays and NatWest believe that the Fed may increase the pace of interest rate hikes in March by raising half a point. Morgan Stanley said it no longer sees a Fed cut this year and expects a 25 basis point slower pace when the central bank actually starts cutting interest rates.

Fed fund futures show traders are seeking a third 25 basis point hike this year and see rates peaking at 5.4% by September.

Fed Governor Philip Jefferson said he has “no illusion” that inflation will quickly fall back to the target and that he is committed to keeping monetary policy tightening in place for as long as necessary.

Data showed new orders for major US capital goods increased more than expected in January while shipments of basic goods rebounded, indicating that business spending on equipment has rebounded.

Easing yields helped growth shares (.RLG) rebound by 0.91%, while Tesla (TSLA.O) jumped 6.14% after the electric car maker said its Brandenburg plant near Berlin was producing 4,000 cars a week, three years ago. Weeks ahead of schedule according to the latest revised production plan by Reuters.

Seagen Inc (SGEN.O) rose 9.73% after The Wall Street Journal reported that Pfizer (PFE.N) was in early talks to acquire the biotech company. Pfizer shares lost 1.69%.

US rail operator Union Pacific (UNP.N) rose 10.08% as CEO Lance Fritz said he was stepping down. Hedge fund Soroban Capital Partners has called for his ouster.

Advance issues outnumbered declining issues on the NYSE by a ratio of 2.30 to 1; On the Nasdaq, a ratio of 1.66 to 1 favored the highs.

The S&P 500 posted four new highs in 52 weeks and five new lows; The Nasdaq Composite posted 58 new highs and 82 new lows.

(Reporting by Chuck Mikolajczak) Editing by David Gregorio

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