Stocks have been on a roll of late, as Congress seems closer to passing fiscal stimulus and economic data show the recovery is still V-shaped. Here’s how markets are acting Monday.
The S&P 500 rose 0.9%, with the tech-heavy Nasdaq up 1%. The 10-Year Treasury yield rose to 0.74%. Yields rose when prices fall. The price of crude oil rose 5% to jus under $39 a barrel. Inflation expectations and the expectation of a strong economic recovery are entering the fray of late.
The S&P 500, in a broad sector rally, is up more than 4% since September 23.
Fiscal stimulus, which could certainly be on the way in the coming days, wold add free money to household and businesses in need, while monetary stimulus — a key foundation to the recovery — is less able to move the needle on the economy the way it did earlier in 2020. Jobs, independent of stimulus, have been coming bak at a fast pace, but may require more stimulus to cognate that pace as businesses are still shut down.
Tech stocks rose solidly Monday, with semiconductor ETF (SOXX) - Get iShares PHLX SOX Semiconductor Sector Index Fund Report up 1.5%, as the past month or so has seen a higher uptick in sales that usual month-over-month. This points to continued strength in secular growth areas like cloud computing, 5G device and electronics demand.
But economically sensitive stocks like consumer discretionary, oil, and manufacturing rose as well, pointing to the investor optimism. Bank ETF (KBWB) - Get Invesco KBW Bank ETF Report rose about 2%, as the yield curve expanded, a major positive for bank profitability.
The optimism comes even as New York City potentially shuts businesses down again, as virus cases tick up. Investors may, again, have to weigh shutdowns against added liquidity from fiscal stimulus.