U.S. markets and stock exchange traded funds jumped Monday, heading toward their best one-day performance since June, as investors were encouraged by a stabilizing bond market, encouraging updates on the Covid-19 vaccine, and progress in fiscal stimulus.
On Monday, the Invesco QQQ Trust (NASDAQ: QQQ) was up 2.5%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) gained 2.1%, and iShares Core S&P 500 ETF (NYSEArca: IVV) was 2.4% higher.
“The sentiment is risk on with more investors showing interest towards cyclical stocks while a positive vaccination drive and better macro numbers are hinting towards a better growth environment,” Keith Buchanan, portfolio manager at GLOBALT, told Reuters.
Johnson & Johnson was the third company to get the greenlight to begin shipping its single-dose coronavirus vaccine in the U.S, Reuters reports.
The House of Representatives passed President Joe Biden’s $1.9 trillion coronavirus relief package early Saturday, and the bill will now go to the Senate. Democrats are pushing to lock in the package before March 14, when a number of federal unemployment assistance programs are set to expire.
Meanwhile, U.S. bond yields continued to ease back on Monday after a spike last month on expectations of rising inflation due to an economic rebound backed by aggressive stimulus measures.
“The concern on the reflation front boils down to the extent of stimulus,” Brian O’Reilly, head of market strategy for Mediolanum International Funds, told the Wall Street Journal. “The market is beginning to rightly question how much is too much.”
The U.S. Federal Reserve has exhibited little concern over inflation as policymakers continue to focus on the need to keep the economic recovery on track. Fed officials have suggested that the recent jump in yields reflects expectations for an economic recovery supported by coronavirus vaccinations and the fiscal stimulus bets.
New data also revealed steady growth in the U.S. economy. The Institute for Supply Management’s February manufacturing index showed U.S. manufacturing activity increased to a three-year high in February amid an acceleration in new product orders.
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