March 6 (Reuters) – A rise in Apple shares and an easing in Treasury yields supported the tech-heavy Nasdaq index on Monday as attention turned to testimony from Federal Reserve Chairman Jerome Powell and jobs data this week for further clues to the path of interest rates.
Shares of the iPhone maker (AAPL.O) soared 3.2% as Goldman Sachs hedged with a “buy” rating.
Other rate-sensitive megacap stocks, including Microsoft Corp (MSFT.O) and Meta Platforms (META.O), were also among the main drivers of the S&P 500 and Nasdaq, the yield of 10-year US Treasuries being stable.
The 10-year yield hit a four-month high of 4.091% last week, while the two-year yield hit 4.944%, its highest level in more than 15 years before pulling back on Friday.
Rising bond yields tend to weigh on equity valuations, especially those of growth and technology stocks, as higher rates reduce the value of future cash flows.
All three major U.S. stock indexes rallied on Friday and posted weekly gains as yields retreated from their highs after comments from Fed policymakers eased jitters around aggressive rate hikes.
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Powell will testify before Congress on Tuesday and Wednesday and investors will be watching for clues on the policy outlook, after recent strong economic data and high inflation figures fueled bets that the central bank could raise interest rates to a higher level than expected.
“If the past is prologue, it will continue to be tough on hawkish rhetoric because it needs to maintain long-term inflation expectations,” said Thomas Hayes, chairman of Great Hill Capital LLC.
Traders expect at least three more 25 basis point hikes this year and see interest rates peak at 5.44% in September from 4.67% currently.
US equities have become quite volatile in recent weeks after a strong performance earlier this year as investors price in the possibility that rates will stay higher for longer. The benchmark S&P 500 index (.SPX) is up 6.2% year-to-date after falling 19.4% in 2022.
As of 12:00 p.m. ET, the Dow Jones Industrial Average (.DJI) was up 131.49 points, or 0.39%, at 33,522.46, the S&P 500 (.SPX) was up 27.32 points, or 0.68%, to 4,072.96, and the Nasdaq Composite (.IXIC) rose 116.37 points, or 1.00%, to 11,805.11.
Nine of the 11 major sectors of the S&P 500 advanced in early trading. However, commodities-related shares of mining (.SPLRCM) and oil (.SPNY) companies fell 1.0% and 0.2%, respectively, after the main consumer of crude and metals, China, has set a lower-than-expected economic growth target this year at around 5%.
U.S.-listed shares of Chinese companies Baidu Inc and PDD Holdings (PDD.O) fell more than 1% each.
Shares of cryptocurrency-related companies fell after Silvergate Capital Corp (SI.N) pulled the plug on its crypto payments network, after raising doubts about the company’s ability to stay in business. The California-based bank slipped 6.1%, while its counterpart Signature Bank (SBNY.O) fell 1.0%.
Data showed that new orders for manufactured goods in the United States fell less than expected in January, as higher orders for machinery and a range of other products indicated that manufacturing was recovering, although the civil aircraft reservations have plummeted.
Advancing issues outnumbered declining issues with a ratio of 1.00 to 1 on the NYSE. Falling issues outnumbered advances by a 1.28-to-1 ratio on the Nasdaq.
The S&P index recorded 19 new 52-week highs and one new low, while the Nasdaq recorded 69 new highs and 45 new lows.
Reporting by Sruthi Shankar, Bansari Mayur Kamdar and Shristi Achar A in Bengaluru; Editing by Vinay Dwivedi and Anil D’Silva
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