(Bloomberg) — Stocks climbed as traders awaited clarity from Federal Reserve Chairman Jerome Powell on how the central bank is perceiving the recent spike in Treasury yields.
Most major groups in the S&P 500 rose, with energy producers joining a surge in oil after OPEC+’s decision to keep output unchanged. Tech shares rebounded after the Nasdaq Composite briefly wiped out its 2021 advance. Bonds were reasonably steady after benchmark 10-year yields approached 1.5%. Mortgages rose above 3% for the first time in seven months — raising concerns that higher borrowing costs will derail the pandemic housing rally.
Powell is expected to use his appearance at a Wall Street Journal event Thursday to reaffirm his looser-for-longer stance for monetary policy and to make clear he’d like to avoid a repeat of last week’s bond-market chaos. In a congressional testimony last month, the Fed chief downplayed concerns that rising yields would hurt the economy, instead declaring at one point that they were a “statement of confidence” in the outlook. The 10-year Treasury rate briefly spiked to 1.6% on the next day.
“The Fed Chair will do his best to quell talks of QE tapering during his much-anticipated speech about the U.S. economy,” said Fawad Razaqzada, an analyst at ThinkMarkets, referring to quantitative easing. “However, Powell can’t be too dovish either as he will also need to address worries about inflation. So, he will have a tough job convincing the markets that Fed’s policy is on the right path. Stocks may drop further if he’s unable to do so.”
Read: SPAC Froth Turns on Itself With Stocks Plunging 20% in Two Weeks
Some key events to watch this week:
The February U.S. employment report on Friday will provide an update on the speed and direction of the nation’s labor market recovery.
These are some of the main moves in markets:
Stocks
The S&P 500 climbed 0.5% as of 11:52 a.m. New York time.The Stoxx Europe 600 Index fell 0.4%.The MSCI Asia Pacific Index declined 2%.The MSCI Emerging Market Index dipped 1.9%.
Currencies
The Bloomberg Dollar Spot Index was little changed.The euro decreased 0.1% to $1.2048.The Japanese yen depreciated 0.5% to 107.55 per dollar.
Bonds
The yield on 10-year Treasuries fell one basis point to 1.48%.Germany’s 10-year yield decreased two basis points to -0.31%.Britain’s 10-year yield dipped four basis points to 0.739%.
Commodities
West Texas Intermediate crude gained 5% to $64.33 a barrel.Gold rose 0.3% to $1,715.59 an ounce.
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