NEW YORK, Feb 27 (Reuters) – U.S. stocks edged higher on Monday as investors embarked on a bargain hunt after last week’s losses, the biggest percentage drops of 2023 for major market indexes. benchmark, on the jitters of potential interest rate hikes to rein in stubbornly high inflation .
Each of the three major indexes climbed more than 1% shortly after the opening bell, in part due to an easing in Treasury yields. Then, stocks gave up some gains as yields moved away from the day’s lows. The yield on two-year Treasury bills, which generally moves in line with interest rate expectations, fell after hitting a nearly four-month high.
“A bit of a bounce because Friday’s reaction was an overreaction,” said Ken Polcari, managing partner at Kace Capital Advisors in Boca Raton, Florida.
“If inflation doesn’t come down and it keeps going up over the next two months (the Fed) could absolutely force it up. The realization now is that there’s no pivot coming this year and people who still think a pivot is coming this year need their heads examined.”
The Dow Jones Industrial Average (.DJI) rose 141.43 points, or 0.43%, to 32,958.35, the S&P 500 (.SPX) gained 23.19 points, or 0.58%, to 3,993.23 and the Nasdaq Composite (.IXIC) added 107.45 points, or 0.94%, to 11,502.39.
Last week, the Dow Industrials fell the biggest weekly percentage since September, and the S&P 500 and Nasdaq saw their biggest weekly percentage declines since December, as economic data and comments from Federal Reserve officials US have raised expectations that the central bank will become more aggressive in raising interest rates.
Economists at UK banks Barclays and NatWest believe the Fed could pick up the pace of its interest rate hikes in March with a half-point hike. Morgan Stanley said it sees no further cuts from the Fed this year and expects a slower pace of 25 basis points when the central bank begins to cut rates.
Fed funds futures show traders are pricing in a third 25 basis point hike this year and see rates peak at 5.4% by September.
Fed Governor Philip Jefferson said he had “no illusions” inflation would soon return to target and pledged to keep tight monetary policy in place for as long as necessary .
Data showed new orders for key U.S.-made capital goods rose more than expected in January, while shipments of basic goods rebounded, suggesting business spending on equipment increased .
Easing yields helped growth stocks (.RLG) rebound 0.91%, while Tesla (TSLA.O) jumped 6.14% after the electric carmaker said its power plant Brandenburg near Berlin was producing 4,000 cars a week, three weeks ahead of schedule according to a recent production plan reviewed by Reuters.
Seagen Inc (SGEN.O) jumped 9.73% after the Wall Street Journal reported that Pfizer (PFE.N) was in preliminary talks to acquire the biotech company. Pfizer shares lost 1.69%.
US rail operator Union Pacific (UNP.N) climbed 10.08% as chief executive Lance Fritz announced he would step down. The hedge fund Soroban Capital Partners had demanded his eviction.
Advancing issues outnumbered declining ones on the NYSE by a ratio of 2.30 to 1; on the Nasdaq, a ratio of 1.66 to 1 favored advancers.
The S&P 500 posted four new 52-week highs and five new lows; the Nasdaq Composite recorded 58 new highs and 82 new lows.
Reporting by Chuck Mikolajczak; Editing by David Gregorio
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