Shares rose across the board on Wall Street on Monday as traders welcomed a drop in bond yields. Investors also looked to Washington, DC, as a major economic stimulus bill was moved to the Senate.
The S&P 500 added about 2.4% on Monday. More than 95% of stocks in the index were higher on Monday, led by energy and technology companies. The Dow Jones Industrial Average was up just over 600 points, or nearly 2%, to 31,535, and the tech-heavy Nasdaq composite was up 3%.
Much of the focus on Wall Street has been on the bond market, with yields on the 10-year Treasury falling to 1.45% after hitting 1.5% last week, the highest level in more than a year. Higher interest rates can slow the economy and discourage borrowing.
Bond yields, affecting interest rates on mortgages and many other types of loans, have risen steadily for much of 2021, as investors bet that vaccination efforts and more government stimulus will lead to strong economic growth later this year. However, in addition to strong economic growth, there are concerns about inflation.
A handful of senior Federal Reserve officials will be making speeches this week that are expected to provide investors with additional information about how concerned the country’s central banker is about the economy and the threat of inflation. Lael Brainard, an advocate for a looser monetary policy to boost job growth, will deliver a speech on monetary policy on Tuesday and Fed Chairman Jerome Powell will make a speech on Thursday.
The House of Representatives passed Biden’s $ 1.9 trillion pandemic relief bill on Friday, and it is now going to the Senate for approval. The bill donates cash in the struggling economy to individuals, businesses, schools, states and cities battered by COVID-19.
The stimulus bill is expected to include another round of one-time $ 1,400 payments to most Americans, including an extension of other refundable tax credits such as the children’s tax credit, and additional support for state and local governments to fight the pandemic.
According to Goldman Sachs analysts in a March 1 research note, the combination of the introduction of vaccines, stimulus payments and higher consumer savings from the fiscal stimulus could spur the economic recovery.
Johnson & Johnson’s stock price rose 1.5% after the U.S. Food and Drug Administration approved the company’s proprietary coronavirus vaccine, a vaccine that doesn’t require extensive refrigeration like those from Moderna and Pfizer.
Energy companies posted one of the biggest gains on Monday. Exxon Mobil was up 3.7% and Occidental Petroleum 3.9%. Industrial companies, including airlines defeated by the coronavirus pandemic, also contributed to boosting the broader market. United Airlines rose 1.2%.
Investors will be getting several major economic reports this week, including the February jobs report on Friday. On Monday, a report on production came in better than expected, and new orders also came in better than expected.